Washington State Feds Get Convictions In Foreclosure Sale Bid Rigging Scam

The Yakima Herald Republic reports that "A former auctioneer who was the key figure in a bid-rigging scandal that ensnared several Yakima businessmen was placed on three years of probation Tuesday."

Reportedly, Bacil "Base" Shirley was caught in a bribery investigation of a Federal government employee, who was wearing a wire, in connection with manipulating bids for foreclosed U.S. Department of Agriculture properties. Once caught red-handed, Shirley then apparently "bought" a "get out of jail free card" from the Feds by agreeing to cooperate with them in the investigation, prosecution, and conviction of three Yakima, Washington bid-rigging businessmen who specialize in the purchase of foreclosure properties as rental investments or for resale. The businessmen were Doug Lemon, Walter D. Nelson, and Ronald G. Frank.

For more, see Ex-auctioneer gets probation in bid rigging.

Editor's Note

Bid rigging at foreclosure sales is an issue I haven't been able to find any recent reports on (until the one referenced above). It may simply be that this method of ripping off homeowners in foreclosure of their home equity doesn't happen anymore (I doubt it), possibly because most foreclosures that make it to the courthouse auction currently involve homes that are worth less than what is owed on them (ie. they're "upside down"), or it may be that it isn't high on law enforcement's list of priorities.

In any event, the U.S. Department of Justice has investigated and brought prosecutions in the past. What follows are links to some pretty old USDOJ Press Releases where the Justice Department announced prosecutions & convictions in connection with foreclosure sale bid rigging in New York City and Northern Virginia.

• Two Northern Virginians Indicted In Real Estate Bid Rigging Scam,
• 25 NY Real Estate Brokers Plead Guilty To Rigging Bids At Queens County Courthouse Foreclosure Auctions,
• Northern Virginia Real Estate Speculator Indicted In Bid Rigging Scam,
• 12 Individuals Plead Guilty To Bid Rigging At Real Estate Foreclosure Auctions At Brooklyn Courthouse,
• Tenth Individual Charged In N. Virginia Real Estate Auction Bid Rigging Investigation.

Other foreclosure sale / bid rigging stories:

• AG Cooper unravels Triangle real estate bid rigging scheme (Investigation finds illegal payoffs that deflated public auction prices),
• Man pleads gulty in bid-rigging foreclosed property sales,
• Former New York Bar Association Vice President pleads guilty in foreclosure sale bribery case.

.

Accused F'closure Sale Bid-Riggers Dodge Bullet As Rocky Mountain Supremes Uphold 'Joint Bidding' Defense In Civil Suit Brought By Foreclosed Owner

In Aspen, Colorado, the Aspen Daily News reports:

• The Colorado Supreme Court on Monday ruled in favor of bidders at a 2007 foreclosure auction for an Aspen condo who were accused by the former owner of collusion and bid rigging.
  
  
• The case of Amos v. Aspen Alps 123, LLC, stems from the foreclosure sale conducted in February 2007 for a condo in the slopeside Aspen Alps complex that was owned by Betty Amos and the estate of her late husband Thomas Righetti. Amos had used the condo as collateral for a $1.6 million loan that had fallen into default, and Equitable Bank of Florida, which made the loan, initiated foreclosure proceedings.
  
  
• The bank submitted a credit bid of $1.6 million, and three other bidders participated in the auction on the Pitkin County Courthouse steps. They were Debra Mayer of Aspen, Mike Seguin of Aspen and Thomas Griffin, who was there on behalf of James Flaum, of the Vail area. The initial bidding was competitive, and Seguin submitted what was ultimately the final bid of $1.86 million.
  
  
• However, according to legal documents on file in the case, after Seguin entered the $1.86 million bid, Griffin suggested that “instead of bidding the property up further and further,” the three parties stop bidding and form an LLC which would allow them to split the purchase three ways. All agreed, and they formed Aspen Alps 123, LLC, which was granted title to the condo by the Pitkin County Public Trustee in August 2007.
  
  
• At issue in the case was whether the agreement, made by three people who had never met before the auction, was merely “joint bidding,” which is permissible, or rose to the level of “bid rigging,” which violates state and federal antitrust laws.
  
  
• The difference, according to relevant case law, is that joint bidding occurs when two or more people pool their resources to buy a property that they could not have afforded individually. Bid rigging is when parties collude to stifle competition.
  
  
• In a 6-1 vote, the justices found that “we cannot say based on the limited evidence in the record that the purpose of the individuals joining to purchase the property was to eliminate, reduce, or interfere with competition.” Chief Justice Michael Bender, however, wrote a dissenting opinion and found that bid rigging did occur.
  
  
• Amos also contended that the sale should be voided because the bank failed to properly notice the foreclosure sale to the estate, which included Righetti’s daughter, Brandy Righetti. Judges at the district and appellate court level never supported this argument, because Amos herself — who is a representative of the estate — was properly noticed. One of the seven Supreme Court justices wrote a dissenting opinion in favor of Amos’ arguments on the notice issue, but no other justices concurred.
  

***

• In backing the bidders, the court relied on testimony they offered during the initial trial, when Mayer and Flaum said that the bidding had exceeded the funds they had at their disposal. Mayer stopped bidding at $1.75 million, and Griffin was authorized by Flaum to spend no more than $1.8 million, according to the testimony. It was Mayer’s testimony that after Seguin had entered the $1.86 million bid, Griffin suggested the parties “stop bidding the property up further and further” and the three agree to a joint-purchase arrangement.
  
  
• The Supreme Court, in its 20-page majority opinion, noted that the joint purchase arrangement did not shut any other bidders out of the process, because no one else was participating in the auction.

***

• Chief Justice Bender, in his dissenting opinion, cited the bidders’ own admitted intentions to stop the bidding process and keep the price from rising further. Justices in the majority are basing their exoneration of the bidders on the “self-serving testimony” that neither Mayer nor Flaum could afford to match Seguin’s final bid, he wrote.
  
  
• “The existence of a conspiracy to rig an auction is neither dependent on the success of the conspiracy nor on any showing that the agreement injured the seller by negatively impacting the final sale price,” Bender wrote. “In the present matter, the parties explicitly agreed to stop bidding to prevent the auction price from rising. This is the definition of anti-competitive behavior.”(1)
  

For the story, see Foreclosure sale was not bid rigging, supremes rule.

For the court ruling, see Amos v. Aspen Alps 123, LLC, 2012 CO 46, No. 10SC187 (June 18, 2012).

For earlier, related posts, see:

• Illegal Bid Rigging Racket? Or Mere Innocent 'Joint Bidding' Arrangement?,
• Joint Purchase By Three Investors At Foreclosure Auction Deemed Bid Rigging By Colorado Appeals Court.

(1) Beware of dissenting opinions! Notwithstanding Colorado Supreme Court's overwhelming 6-1 vote upholding the 'joint bidding' defense in this case, the persuasiveness of Chief Justice Bender's logic in his dissenting opinion could be relied on by the Colorado state legislature to pass a statute specifically declaring the existence of a bid-rigging racket if the facts in future cases are similar to those in this case. See, for example, Foreclosing Lender's Failure To Serve Junior Lienholder Now OK In Indiana; New Law Reverses State High Court Ruling, Now Permits Lawsuit 'Do-Overs', reporting that Indiana Supreme Court Justice Frank Sullivan, Jr.'s lone dissent in the case (a 4-1 ruling), Citizens State Bank of New Castle v. Countrywide Home Loans, Inc. 949 N.E.2d 1195 (2011), formed the basis of a subsequently-passed statute that reversed the effect of the court ruling for future cases.

Further, there is nothing stopping judges in other states/jurisdictions from 'leaning' on Chief Justice Bender's logic in reaching a contrary conclusion to that of the majority in this case. See, for example, Highlights From Recent Oregon Court Ruling Booting MERS, in which a U.S. District Judge in Oregon gave significant consideration to the observations of a Minnesota Supreme Court Justice's dissenting opinion in Jackson v. Mortgage Electronic Registration Systems, Inc., 770 N.W.2d 487 (Minn. 2009) when reaching his decision. According to Chief Justice Bender:

• ¶42 The majority reasons that the bidders’ agreement did not constitute unlawful bid rigging, but was instead lawful “pooling” of the bidders’ resources to create a joint bid similar to the arrangement that the Wyoming Federal District Court found to be lawful in Love v. Basque Cartel, 873 F.Supp. 563 (D. Wyo. 1995). Maj. op. at ¶ 33. Specifically, the Love court warned that “[b]id rigging should not be confused with joint bidding, which allows bidders to pool their resources to place bids on property which they would otherwise be unable to afford.” 873 F.Supp. at 578. I disagree with the majority’s reliance on Love because that case is easily distinguished from the present matter.
  
  ¶43 In Love, the court based its ruling that the joint bidding agreement constituted lawful bid pooling on three reasons.
  
  First, the Love court was persuaded by the fact that the parties to the joint bidding agreement were never in competition because each was only interested in owning a distinct parcel of the larger ranch that their joint bid succeeded in winning. Id. at 577-78.
  
  Second, the Love court reasoned that it was significant that the was no evidence that others that were present at the auction were prevented from matching or exceeding the joint bidders’ final bid. Id. at 578.
  
  Finally, the Love court held that the agreement constituted lawful joint bidding because the evidence showed that in the absence of the joint bidding agreement, the reserve would not have been met for several of the parcels and therefore the auction would have failed. Id. at 579.
  
  ¶44 Each of these rationales is inapplicable to the auction in this case.
  
  First, there was only one parcel, the condo, and all three bidders were bidding competitively against one another to obtain the property in its entirety.
  
  Second, unlike in Love, where there were other bidders that may have competed against the joint bidders, here, all of the bidders present at the auction colluded to stop bidding. Their collusive behavior, which occurred while the auction was underway, destroyed any incentive among the bidders to match or to exceed the final bid.
  
  Finally, the reserve (or minimum bid amount) was met well before the parties conspired to stop bidding up the price of the auction. Thus, the success of the auction, in surpassing the reserve, was not contingent upon the parties’ ability to submit a combined bid. Although I am mindful of Love’s warning that ““[b]id rigging should not be confused with joint bidding,” id. at 577, Love should not control this case. I acknowledge that, under certain circumstances, a combined bid may actually serve to foster competition by allowing joint bids to reach ever higher. In this case, however, the combined bid served to cut off all competition and, in the words of one of the bidders, “stop the bidding process.”
  
  ¶45 Indeed, in direct contradiction to the facts in Love, the uncontroverted evidence here shows that the bidders did not come together to make the final, winning bid.
  
  Rather, after several rounds of bidding, Seguin, in his individual capacity, bid $1.86 million, and then, once that bid was submitted, Griffin (representing Flaum) approached Meyer and Seguin and “proposed to the others that, instead of ‘bidding the property up further and further,’ they cease bidding against each other and buy the property jointly.” Maj. op. at ¶ 6.
  
  Unlike in Love, where, prior to the final round of bidding, the bidders pooled their bids to reach a price that they otherwise could not afford, here, Seguin could have afforded the final bid price independent of the financial contributions of the other bidders.
  
  ¶46 Seguin won the auction with his individual bid, and it was not until after the close of the auction that the parties came together to form Aspen Alps. At the time that their anti-competitive agreement occurred, Seguin held the high bid independent of the others. Thus, the incentive for him to join in the agreement was to prevent the auction price from getting bid up “further and further.”
  
  Seguin was able to buy-off his competitors by agreeing to “form an LLC and stop the bidding process.” In my view, their agreement represented a classic bid rigging scheme. It constituted an “’agreement between competitors pursuant to which contract offers are to be submitted to or withheld from a third party.’” Love, 873 F.Supp. at 576 (quoting United States v. Mobile Materials, Inc., 881 F.2d 866, 869 (10th Cir. 1989), cert. denied 493 U.S. 1043 (1990)).
  
  ¶47 The majority reasons that this scheme did not constitute bid rigging because the non-winning bidders, Flaum (who was represented by Griffin at the auction) and Meyer, each provided self-serving testimony that they could not afford to match Seguin’s final, winning bid. Maj. op. at ¶¶ 34-35.
  
  In my view, this misapprehends federal bid rigging jurisprudence, which has long recognized that the existence of a conspiracy to rig an auction is neither dependent on the success of the conspiracy nor on any showing that the agreement injured the seller by negatively impacting the final sale price. See ABA Section of Antitrust Law, Model Jury Instructions in Criminal Antitrust Cases 61 (2009) (“Bid Rigging”).
  
  Rather, the relevant inquiry is whether the “aim and result” of the conspiracy was “the elimination of one form of competition.” Id. Thus, the sole issue in determining whether a joint bidding scheme constitutes unlawful bid rigging is whether it produces an anti-competitive result. In the present matter, the parties explicitly agreed to stop bidding to prevent the auction price from rising. This is the definition of anti-competitive behavior. Id. (“A conspiracy to rig bids may be an agreement among competitors about . . . who should be the successful bidder . . . or who should refrain from bidding . . . that affects, limits, or avoids competition among them.”).
  
  ¶48 Finally, I do not agree with the majority’s implication that the fact that the bidders’ agreement was made during—rather than before—the auction supports the conclusion that this scheme did not constitute bid rigging. Although the majority acknowledges that “a prior agreement is not necessary to prove bid rigging,” maj. op. at ¶ 34, it nevertheless uses this fact to distinguish the present matter from Guthrie, in which the federal district court for the Eastern District of Washington denied a defendant’s motion for judgment of acquittal on bid rigging charges because the defendant had contacted other potential bidders and offered them money to refrain from participating in upcoming auctions. 814 F.Supp. at 943-44, 950.
  
  In my view, from a competitiveness standpoint, this case presents a more troublesome situation than existed in Guthrie. In Guthrie, because the alleged bid rigging occurred prior to the auctions, there was no guarantee that the defendant had bought off every potential bidder that might attend the auction. See id. at 943-44.
  
  In contrast, because the bidders’ agreement in this case was not made until after the auction was already underway, the three bidders were assured that their agreement eliminated all competition.
  
  ¶49 I would hold that the bidders’ agreement constituted unlawful bid rigging in violation of section 6-4-106 and proceed to address the remedy issue consistent with section 6-4-121, C.R.S. (2011), which, in my opinion, would void this unlawful transfer. Accordingly, I respectfully dissent from Part II.B of the majority’s opinion.

Illegal Bid Rigging Racket? Or Mere Innocent 'Joint Bidding' Arrangement?

Real estate investors and others who have gotten themselves pinched on charges alleging participation in an illegal bid rigging scam at a public auction(1) may wish to consider an observation made by a Colorado Appeals Court in a 2010 ruling in considering whether to mount a defense before deciding to 'race to the prosecutor's office' and spill their guts about the racket, throwing their co-conspirators under the bus in the process in an attempt beat the rap, or at least reduce any anticipated prison sentence.(2)

In the ruling, the court made the following distinction between what you can do and what you can't do when teaming up with others when bidding at auctions (bold text is my emphasis):

• Federal antitrust cases distinguish between unlawful bid rigging and lawful joint bidding. Bid rigging has been found when two or more competitors coordinate their bids to a third party. United States v. Mobile Materials, Inc., 881 F.2d 866, 869 (10th Cir. 1989).
  
  However, "[b]id rigging should not be confused with joint bidding, which allows bidders to pool their resources to place bids on property which they would otherwise be unable to afford." Love v. Basque Cartel, 873 F. Supp. 563, 577 (D. Wyo. 1995), aff'd sub nom. Dry Creek Cattle Co. v. Basque Cartel, 95 F.3d 1161 (10th Cir. 1996) (unpublished table decision).[7](3)
  
  In Love, 873 F. Supp. at 566, 568, on which the trial court relied, the court determined that the bidding at an auction for a 90,000-acre ranch did not constitute bid rigging because the auction encouraged joint bidding: in early rounds, bids were taken on individual subdivided parcels; in later rounds, bids were taken on the ranch as a whole. Id. at 567, 578.
  
  The Love court concluded that in pooling their resources to bid on the entire ranch, the individual defendants had not suppressed competition as to the individual parcels. Id. at 577. And it found no evidence that anyone had been prevented from bidding on the entire ranch. Id.

***

• In United States v. Guthrie, 814 F. Supp. 942 (E.D. Wash. 1993), aff'd, 17 F.3d 397 (9th Cir. 1994) (unpublished table decision), a bidder who twice paid other bidders not to attend foreclosure sales at which he submitted winning bids for $1 above minimum bid levels was convicted of bid rigging.
  
  Although unlike here Guthrie rigged the bids before the sales, the court's explanation of the anticompetitive nature of bid rigging as "an agreement between two or more persons to eliminate, reduce, or interfere with competition for a job or contract that is to be awarded on the basis of bids," is instructive. Id. at 949.

For the court's ruling, see Amos v. Aspen Alps 123, LLC, No. 08CA2009 (Colo. App. 2010),(4) which decided how to apply the foregoing cases to the facts before it, and its legal analysis in considering whether a foreclosure sale tainted by illegal bid rigging should be voided.

(1) See e.g. California Real Estate Investors Agree to Plead Guilty to Bid Rigging at Public Foreclosure Auctions (Investigation Yields Eight Plea Agreements).

(2) "When a conspiracy is exposed by an arrest or execution of search warrants, soon-to-be defendants know that the first one to "belly up" and tell what he knows receives the best deal. The pressure is to bargain and bargain early, even if an indictment has not been filed." United States v. Moody, 206 F.3d 609, 617 (6th Cir. 2000) (Wiseman, J., concurring) (referring to the not-uncommon 'race to the courthouse' that breaks out among participants in an uncovered criminal conspiracy).

(3) In Kearney v. Taylor, 56 U.S. 494, 520 (1853), the Court explained that if "[t]he property at stake might be beyond the means of the individual, or might absorb more of them than he would desire to invest in the article, or be of a description that a mere capitalist, without practical men as associates, would not wish to encumber himself with," an agreement established joint bidding, rather than bid rigging. Joint bidding does "not . . . prevent competition, but . .. enable[s] . . . the persons composing [the agreement] to participate in the biddings." Id. at 521. However, "shutting out competition, and depressing the sale, so as to obtain the property at a sacrifice" is bid rigging. Id.

(4) Subsequent History: Writ of certiorari granted in part and denied in part Amos v. Aspen Alps 123, LLC, 2011 Colo. LEXIS 279 (Colo. Mar. 28, 2011).

Suspects In N. Calif. F'closure Sale Bid Rigging Conspiracies Continue Falling Like Dominoes As 'Antitrust Feds' Ready To Notch Two More Guilty Pleas

From the U.S. Department of Justice:

• Two California real estate investors have agreed to plead guilty [] for their roles in a conspiracy to rig bids and to commit mail fraud at public real estate foreclosure auctions in Northern California, the Department of Justice announced.



• Charges were filed [Friday] in U.S. District Court for the Northern District of California in Oakland, Calif., against Eric Larsen of San Leandro, Calif., and Timothy Powers of Alamo, Calif., for their participation in bid-rigging and mail-fraud conspiracies at public real estate foreclosure auctions in Contra Costa and Alameda counties, Calif.(1)

***

• According to court documents, Larsen and Powers conspired with others not to bid against one another, but instead designate a winning bidder to obtain the title to selected real estate offered at public real estate foreclosure auctions in Contra Costa and Alameda counties.



• Larsen and Powers also were charged with conspiracies to use the mail to carry out a fraudulent scheme to divert money to co-conspirators away from mortgage holders and others by holding private auctions open only to members of the conspiracy and awarding the selected real estate to the conspirators who submitted the highest bids.



• These private auctions took place at or near the courthouse steps where the public auctions were held. The department said that Larsen and Powers also took steps to conceal the payoffs to conspirators for not bidding competitively and caused false and misleading statements to be made on records of public auctions regarding the total purchase price of the selected real estate.



• Each violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals.(2)

For the U.S. Justice Department press release, see Two California Real Estate Investors Agree to Plead Guilty to Bid Rigging at Public Foreclosure Auctions (Investigation Has Yielded Charges Against 10 Individuals to Date).

Go here for other posts & links on bid rigging at foreclosure and other real estate-related auctions.

Go here for links to more from the U.S. Justice Department on bid-rigging prosecutions.

(1) The investigation into fraud and bid rigging at certain real estate foreclosure auctions in Northern California is being conducted by the Antitrust Division’s San Francisco Office and the FBI’s San Francisco office. Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Office at 415-436-6660, visit www.justice.gov/atr/contact/newcase.htm or call the FBI tip line at 415-553-7400.

(2) As has been pointed out here in an earlier post, suspects who have been pinched on bid-rigging charges and are considering copping guilty pleas should first consider whether their alleged unlawful bid rigging racket was really nothing more than an innocent, lawful joint bidding endeavor. See Illegal Bid Rigging Racket? Or Mere Innocent 'Joint Bidding' Arrangement?

Antitrust Feds Ring Up More Bid-Rigging Convictions Related To Foreclosure Sale Auctions; Snagged Alabama Duo Agree To 'Sing' Against Co-Conspirators

In Mobile, Alabama, the Press Register reports:

• Two real estate investors from the Mobile area have agreed to plead guilty to federal bid-rigging charges accusing them of manipulating auctions of foreclosed properties. According to plea agreements filed this week in U.S. District Court in Mobile, Harold M. Buchman and the company he co-owns, M&B Builders, conspired with Allen K. French and others to suppress bids at foreclosure auctions. Prosecutors allege that the conspiracy dated to May 2001 and lasted until at least March of last year.

***

• “The Antitrust Division continues to vigorously pursue bid-rigging conspiracies at real estate foreclosure auctions, and will work with its law enforcement partners to ensure that the process is fair and open so that consumers will benefit from competition,” [Acting Assistant Attorney General Sharis A.] Pozen stated.(1)

***

• An attorney for French, Walter Honeycutt, said he expects indictments against other investors. The plea agreements for Buchman and French both reference their cooperation in the ongoing investigation.(2)



• Foreclosure auctions typically are held at the county courthouse and allow mortgage holders to recoup the money they lose when homeowners default on their loans. Prosecutors contend that Buchman, French and others who have not been charged decided among themselves who would bid on various properties, while the others agreed not to compete.



• “When it started out, it was kind of a gentlemen’s agreement,” Honeycutt said. Then someone else took over the operation and implemented a formal scheme, Honeycutt said.



• After one investor would get the property cheaply, according authorities, participants would hold a secret second auction among themselves. The winning bidder would make payoffs to other investors for not competing at the public auction, according to the allegations. The money would be paid out based on predetermined specifications. “It’s a complicated formula,” Honeycutt said.

***

• The plea agreement calls for M&B Builders to plead guilty to violating the Sherman Antitrust Act and attempted mail fraud conspiracy. The company will pay a $250,000 fine and restitution in the amount of $18,345.20, under the agreement.



• Buchman and French agreed to plead guilty to one count each of antitrust violations. Buchman will serve 6 months in prison and pay a fine of $21,141 and at least $30,000 in restitution. The plea document requires him to do all of his time in a minimum-security prison (ie. a 'Club Fed' facility(3)) and not home confinement or a halfway house.



• French, meanwhile, agreed to pay a $20,000 fine and at least $23,000 in restitution. Under the terms, the judge would be required to sentence him to 6 months or less in prison.(4)

For the story, see Mobile real estate investors agree to plead guilty to manipulating foreclosure auctions.

For the U.S. Department of Justice press release, see Alabama Real Estate Investors Agree to Plead Guilty to Conspiracy to Rig Bids for the Purchase of Real Estate at Public Foreclosure Auctions.

Go here for other posts & links on bid rigging at foreclosure and other real estate-related auctions.

(1) According to a U.S. Department of Justice press release, the Antitrust Division and the FBI have identified a pattern of collusive schemes among real estate investors aimed at eliminating competition at real estate foreclosure auctions, and these charges are part of the department’s ongoing effort to combat this conduct and restore competition to public auctions.

The investigation into fraud and bid rigging at certain real estate foreclosure auctions in Southern Alabama is being conducted by the Antitrust Division’s Atlanta Field Office and the FBI’s Mobile Field Office, with the assistance of the U.S. Attorney’s Office for the Southern District of Alabama. Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s Atlanta Field Office at 404-331-7100 or visit www.justice.gov/atr/contact/newcase.htm.

See Foreclosure Auction Buyer: "Object Is To Get Cheapest Price We Can, Not To Bid Each Other Up" As Intimidation Accusations Flare Up At Courthouse Sales for an indication that these bid-rigging rackets at foreclosure sales appear to be pretty blatant activities that are often perpetrated with impunity.

(2) Evidently, Buchman and French have concluded that there is no honor among thieves and, consequently, have decided to throw their co-conspirators under the bus by beating them in the 'race to the prosecutor's office' and agreeing to cooperate with the Feds in an effort to save their butts. This time-honored approach to saving one's own rump has been cogently articulated by at least one learned federal judge:

• "When a conspiracy is exposed by an arrest or execution of search warrants, soon-to-be defendants know that the first one to "belly up" and tell what he knows receives the best deal. The pressure is to bargain and bargain early, even if an indictment has not been filed." United States v. Moody, 206 F.3d 609, 617 (6th Cir. 2000) (Wiseman, J., concurring) (referring to the not-uncommon 'race to the courthouse' that breaks out among participants in an uncovered criminal conspiracy).

(3) Possibly something 'comfy' and nearby the Mobile area so their families can stop by and visit them often, along the lines of the prison camp formerly located at Eglin Air Force Base in Ft. Walton Beach, Florida, or maybe the one over at the Pensacola Naval Air Station, in Pensacola, Florida.

(4) As has been pointed out here in an earlier post, suspects who have been pinched on bid-rigging charges and are considering copping guilty pleas should first consider whether their alleged unlawful bid rigging racket was really nothing more than an innocent, lawful joint bidding endeavor. See Illegal Bid Rigging Racket? Or Mere Innocent 'Joint Bidding' Arrangement?

Sacramento Feds Continue Scoring Guilty Pleas In Northern California Foreclosure Sale Bid Rigging Scams That Violate Sherman Act

From the Office of the U.S. Attorney (Sacramento, California):

• A real estate investor pleaded guilty [] in U.S. District Court in Sacramento, Calif., to conspiring to rig bids and commit mail fraud at public real estate foreclosure auctions held in San Joaquin County, Calif., Christine Varney, Assistant Attorney General of the Department of Justice’s Antitrust Division, and Benjamin B. Wagner, U.S. Attorney for the Eastern District of California, announced.



• Robert Rose, 47, of Danville, pleaded guilty to conspiring with a group of real estate speculators who agreed not to bid against each other at certain public real estate foreclosure auctions in San Joaquin County.(1)



• The primary purpose of the conspiracy was to suppress and restrain competition and to obtain selected real estate offered at San Joaquin County public foreclosure auctions at non-competitive prices, the department said in court papers.



• According to the court documents, after the conspirators’ designated bidder bought a property at a public auction, they would hold a second, private auction, at which each participating conspirator would bid the amount above the public auction price he or she was willing to pay.



• The conspirator who bid the highest amount at the end of the private auction won the property. The difference between the price at the public auction and that at the second auction was the group’s illicit profit, and it was divided among the conspirators in payoffs. According to his plea agreement, Rose participated in the scheme beginning in or about August 2009 until in or about October 2009.(2)

For the U.S. Attorney press release, see California Real Estate Investor Pleads Guilty To Bid Rigging At Public Foreclosure Auctions.

Go here for other posts & links on bid rigging at foreclosure and other real estate-related auctions.

(1) According to the U.S. Attorney press release, Rose pleaded guilty to bid rigging, a violation of the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million fine. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine. Rose also pleaded guilty to conspiracy to commit mail fraud, which carries a maximum sentence of 30 years in prison and a $1 million fine.

“Perpetrators of schemes like the one charged here do not compete fairly,” U.S. Attorney Wagner stated. “Instead, they muscle out honest bidders who don’t play along. Such schemes not only drive down the price of the auctioned properties, they steal equity from those homeowners trying to weather the financial storm. Rose is the eighth defendant charged in this case. Prosecutions like this one send a clear message to those who may be tempted to cheat at auction: Don’t.”

The U.S. Justice Department urges anyone with information concerning bid rigging or fraud related to real estate foreclosure auctions to contact the Antitrust Division’s San Francisco Office at 415-436-6660 or visit www.justice.gov/atr/contact/newcase.htm, the U.S. Attorney’s Office for the Eastern District of California at 916-554-2700 or the FBI’s Sacramento Division at 916-481-9110.

(2) For indications that these bid-rigging rackets at foreclosure sales appear to be pretty blatant activities all over the country that are often perpetrated with impunity, see:

• Foreclosure Auction Buyer: "Object Is To Get Cheapest Price We Can, Not To Bid Each Other Up" As Intimidation Accusations Flare Up At Courthouse Sales,
• Subtle 'Under The Radar' Foreclosure Sale Bid Rigging Racket, Or Mere Familiarity With Competitors' Business Models?,
• Mysterious lack of bidding wars plagues foreclosure auctions (Among the few bidders at county foreclosure auctions, some nab houses for a dollar more than the minimum bid).

A story earlier this year in the San Francisco Chronicle (FBI looks into bid rigging at courthouse auctions) contains this excerpt describing the observations of one individual who attended one of these auctions:

• A real estate agent who attended some San Francisco auctions in hopes of buying investment property described what he witnessed.
  
  "If you start to bid, there are about five guys who work together and who box you in," said the man, who asked not to be named for fear of retribution. "One guy came up to bid who clearly was not part of that crew. The guys were bidding. At some point, (their ringleader) turned to (the outsider) and said, 'You must really like this property. It must be really important to you.' He had a piece of paper in his hand; he showed it to the guy. The guy nodded OK and then disappeared into the building."

Feds Bag Three More Northern California Real Estate Operators On Charges Of Bid Rigging At Public/Courthouse Foreclosure Sales

From the U.S. Department of Justice:

• Three Northern California real estate investors have agreed to plead guilty today for their roles in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Northern California, the Department of Justice announced. To date, as a result of the ongoing investigation, 20 individuals have agreed to plead guilty.



• Charges were filed [] in U.S. District Court for the Northern District of California in Oakland, Calif., against Barry Heisner of Brentwood, Calif.; Dominic Leung of Alameda, Calif.; and Hilton Wong of San Ramon, Calif.



• According to court documents, for various lengths of time between August 2008 and January 2011, Heisner, Leung and Wong conspired with others not to bid against one another at public real estate foreclosure auctions. Instead, the investors designated a winning bidder to obtain selected properties at public real estate foreclosure auctions in Contra Costa County.

***

• Heisner, Leung and Wong also were charged with conspiracies to use the mail to carry out a scheme to fraudulently acquire title to selected properties sold at public auctions, to make and receive payoffs, and to divert money to co-conspirators that would have gone to mortgage holders and others by holding second, private auctions open only to members of the conspiracy.



• The department said that the selected properties were then awarded to the conspirators who submitted the highest bids in the second, private auctions. The private auctions took place at or near the courthouse steps where the public auctions were held. According to court documents, a forfeiture allegation was also included in the charges against Heisner.



• The department said that the primary purpose of the conspiracies was to suppress and restrain competition and to conceal payoffs in order to obtain selected real estate offered at Contra Costa County public foreclosure auctions at noncompetitive prices.



• When real estate properties are sold at these auctions, the proceeds are used to pay off the mortgage and other debt attached to the property, with remaining proceeds, if any, paid to the homeowner.



• Each violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. Each count of conspiracy to commit mail fraud carries a maximum sentence of 30 years in prison and a $1 million fine.



• The government can also seek to forfeit the proceeds earned from participating in the conspiracy to commit mail fraud. The maximum fine for the Sherman Act charges may be increased to twice the gain derived from the crime or twice the loss suffered by the victim if either amount is greater than the $1 million statutory maximum.(1)

For the U.S. Justice Department press release, see Three Northern California Real Estate Investors Agree to Plead Guilty to Bid Rigging at Public Foreclosure Auctions (Investigation Has Yielded 20 Plea Agreements to Date).

Go here for other posts & links on bid rigging at foreclosure and other real estate-related auctions.

Go here for links to more from the U.S. Justice Department on bid-rigging prosecutions, generally.

(1) According to the press release, [these] charges are the latest cases filed by the department in its ongoing investigation into bid rigging and fraud at public real estate foreclosure auctions in San Francisco, San Mateo, Contra Costa and Alameda Counties, Calif. The investigation into fraud and bid rigging at certain real estate foreclosure auctions in Northern California is being conducted by the Antitrust Division’s San Francisco Field Office and the FBI’s San Francisco office.

Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Field Office at 415-436-6660, visit www.justice.gov/atr/contact/newcase.htm or call the FBI tip line at 415-553-7400.

By the way, by agreeing to plead guilty, these defendants (at least implicitly) have acknowledged that their 'arrangement' at the foreclosure sales was not an innocent, lawful joint bidding endeavor. See Illegal Bid Rigging Racket? Or Mere Innocent 'Joint Bidding' Arrangement?

More Light Shines On Baltimore City Tax Sale Auctions & Bid-Rigging Allegations

In Baltimore, Maryland, The Huffington Post Investigative Fund reports (story appears in The Baltimore Sun):

• Baltimore City officials on Monday auctioned liens on 12,689 homes and properties whose owners failed to pay local taxes and municipal bills — a probable record and twice as many as in 2006 in the midst of Baltimore's housing bubble.

***

• The city's record tax sale comes as the Justice Department continues a criminal investigation into bid-rigging by some investors. Federal prosecutors allege that the activity compromised as many as two dozen of the tax sales in Baltimore and several Maryland counties. Prosecutors say investors agreed in advance which properties to bid on, improperly reducing the money earned by municipalities. Three investors have pleaded guilty in the case.

***

• Vicki Valentine lost her West Baltimore home that way one raw day in early February. Real estate investors snatched her property over what began with an unpaid city water bill of $362. [...] Valentine was incredulous when the price to keep her property shot past $3,600. Jobless and lacking the savings to pay, she said she could do little to stave off the day of reckoning. [...] Though Valentine had no way to know about it, some investors rigged the 2006 Baltimore tax sale auction that led to her eviction, federal prosecutors alleged in court.

• The roots of that conspiracy run deep, prosecutors said. For years, a handful of Baltimore real estate lawyers and their investment partners quietly dominated Maryland tax sale auctions, with few questions asked about their bidding tactics or collection policies.

***

• Prosecutors went on to charge three men with conspiring to rig bids at 21 auctions in Baltimore and four other jurisdictions, including Montgomery and Prince George's counties between 2002 and 2007. All three have since pleaded guilty.(1) No other charges have been filed.

For the entire story, see City auctions liens on homes; investors can collect.

For another version of the same story, appearing in The Huffungton Post, see The Other Foreclosure Menace (Mortgage Paid Off, Woman Loses Home -- Over a Small Water Bill); and go here for accompanying VIDEO: Tapped Out: How an Unpaid Water Bill Cost a Baltimore Woman Her Home.

Go here for more on bid rigging at real estate-related auctions.

(1) In earlier stories related to this Maryland bid rigging prosecution, see:

• Bid-Rigging Attorney Gets 12 Months In 5-Year, $10 Million Conspiracy At Baltimore-Area Real Estate Tax Lien Auctions,
• Baltimore County lawyer pleads guilty to bid-rigging at tax auctions,
• Baltimore County lawyer to enter guilty plea in tax sale bid,
• Federal judge rules no joint-venture defense,
• Despite ruling, no deal ahead in bid-rigging case in Md.,
• Baltimore County businessman Jack W. Stollof to plead guilty to bid.

Garden State Duo Strike Plea Deal In Advance Of Being Charged In Municipal Tax Lien Auction Bid Rigging Scam; Agree To 'Sing' To Feds In Ongoing Probe

From the U.S. Department of Justice:

• Two financial investors who purchased municipal tax liens at auctions in New Jersey pleaded guilty [February 23] for conspiring to rig bids for the sale of tax liens auctioned by municipalities throughout the state, the Department of Justice announced.



• A felony charge was filed [February 23] in U.S. District Court for the District of New Jersey in Newark, N.J., against Robert W. Stein of Huntington Valley, Pa., and David M. Farber of Cherry Hill, N.J. Under the plea agreements, which are subject to court approval, Stein and Farber have both agreed to cooperate with the department’s ongoing investigation.(1)



• According to the felony charge against Stein, from as early as 1998 until approximately spring 2009, Stein participated in a conspiracy to rig bids at auctions for the sale of municipal tax liens in New Jersey by agreeing to allocate among certain bidders on which liens to bid.



• According to the felony charge against Farber, from as early as the beginning of 2005 through approximately February 2009, Farber also participated in a conspiracy to rig bids at auctions for the sale of municipal tax liens in New Jersey. The department said that both Stein and Farber proceeded to submit bids in accordance with their agreements and purchased tax liens at collusive and non-competitive interest rates.(2)

***

• The department said that the primary purpose of the conspiracies was to suppress and restrain competition to obtain selected municipal tax liens offered at public auctions at non-competitive interest rates.

***

• Each violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine for a Sherman Act violation may be increased to twice the gain derived from the crime or twice the loss suffered by the victim if either amount is greater than the $1 million statutory maximum.



• Today’s pleas are the result of an ongoing investigation into bid rigging or fraud related to municipal tax lien auctions.(3) On Aug. 24, 2011, Isadore H. May, Richard J. Pisciotta Jr. and William A. Collins each pleaded guilty to one count of bid rigging in connection with their participation in a conspiracy to allocate liens at New Jersey municipal tax lien auctions.

For the U.S. Justice Department press release, see Two Financial Investors Plead Guilty to Bid Rigging at Municipal Tax Lien Auctions in New Jersey.

Go here for other posts & links on bid rigging at foreclosure and other real estate-related auctions.

Go here for links to more from the U.S. Justice Department on bid-rigging prosecutions.

(1) "When a conspiracy is exposed by an arrest or execution of search warrants, soon-to-be defendants know that the first one to "belly up" and tell what he knows receives the best deal. The pressure is to bargain and bargain early, even if an indictment has not been filed." United States v. Moody, 206 F.3d 609, 617 (6th Cir. 2000) (Wiseman, J., concurring) (referring to the not-uncommon 'race to the prosecutor's office' that breaks out among participants in an 'about-to-fall-apart' criminal conspiracy).

(2) The DOJ press release describes the nature of the bidding process on municipal tax liens in New Jersey:

• When the owner of real property fails to pay taxes on that property, the municipality in which the property is located may attach a lien for the amount of the unpaid taxes. If the taxes remain unpaid after a waiting period, the lien may be sold at auction. State law requires that investors bid on the interest rate delinquent homeowners will pay upon redemption.
  
  By law, the bid opens at 18 percent interest and, through a competitive bidding process, can be driven down to zero percent. If a lien remains unpaid after a certain period of time, the investor who purchased the lien may begin foreclosure proceedings against the property to which the lien is attached.
  
  According to the court documents, Stein conspired with others not to bid against one another at municipal tax lien auctions in New Jersey. Farber also agreed not bid against certain bidders at tax lien auctions. Because the conspiracies permitted the conspirators to purchase tax liens with limited competition, each conspirator was able to obtain liens which earned a higher interest rate.
  
  Property owners were therefore made to pay higher interest on their tax debts than they would have paid had their liens been purchased in open and honest competition.

(3) The ongoing investigation is being conducted by the Antitrust Division’s New York Field Office and the FBI’s Atlantic City, N.J., office. Anyone with information concerning bid rigging or fraud related to municipal tax lien auctions should contact the Antitrust Division’s New York Field Office at 212-335-8000, visit www.justice.gov/atr/contact/newcase.htm or contact the Atlantic City Resident Agency of the FBI at 609-677-6400.

Antitrust Feds Squeeze Two More N. California Investors Into Deals To Plead Guilty For Their Roles In Bid Rigging Racket At Courthouse Real Estate Foreclosure Sales; Suspects Bagged Now At 54 & Counting

From the U.S. Department of Justice (Washington, D.C.):

• Two Northern California real estate investors have agreed to plead guilty for their role in bid rigging and fraud conspiracies at public real estate foreclosure auctions in Northern California, the Department of Justice announced.
  
  Felony charges were filed [] in U.S. District Court of the Northern District of California in Oakland against real estate investors Mark Roemer and Bradley Roemer. To date, 54 individuals have pleaded guilty or agreed to plead guilty to criminal charges as a result of the department’s ongoing antitrust investigations into bid rigging and fraud at public foreclosure auctions in Northern California.
  
  In addition, 20 other real estate investors have been charged in five multi-count indictments for their roles in bid rigging and fraud schemes at foreclosure auctions in Alameda, Contra Costa, San Mateo and San Francisco counties.
  
  “Cynical investors who rig real estate foreclosure auctions will be held accountable for their crimes,” said Assistant Attorney General Bill Baer of the Department of Justice’s Antitrust Division. “Winning auctions through fraud injures consumers and mortgage lenders by circumventing the competitive process that the antitrust laws are intended to protect.”
  
  According to court documents, beginning as early as December 2009 and continuing until about November 2010, the defendants conspired with others not to bid against one another, and instead to designate a winning bidder to obtain selected properties at public real estate foreclosure auctions in Alameda County. Both defendants were also charged with conspiring to use the mail to carry out a scheme to fraudulently acquire title to selected Alameda County properties sold at public auctions, to make and receive payoffs, and to divert money to co-conspirators that would have otherwise gone to mortgage holders and other beneficiaries by holding second, private auctions open only to members of the conspiracy. Selected properties were then awarded to the conspirators who submitted the highest bids in the second, private auctions. The private auctions often took place at or near the courthouse steps where the public auctions were held.
  
  “These charges demonstrate our continued commitment to investigate and prosecute individuals and organizations responsible for the corruption of the public foreclosure auction process,” said Special Agent in Charge David J. Johnson of the FBI’s San Francisco Field Office. “The FBI is committed to working these important cases and remains unwavering in our dedication to bringing the members of these illegal conspiracies to justice.”
  
  Each violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine for the Sherman Act charges may be increased to twice the gain derived from the crime or twice the loss suffered by the victims if either amount is greater than $1 million. A count of conspiracy to commit mail fraud carries a maximum sentence of 30 years in prison and a $1 million fine. The government can also seek to forfeit the proceeds earned from participating in the conspiracy to commit mail fraud.
  
  [These] charges are the latest filed by the department in its ongoing investigation into bid rigging and fraud at public real estate foreclosure auctions in San Francisco, San Mateo, Contra Costa and Alameda counties in California. These investigations are being conducted by the Antitrust Division’s San Francisco Office and the FBI’s San Francisco Office. Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Office at 415-934-5300, or call the FBI tip line at 415-553-7400.

Source: Two Northern California Real Estate Investors Agree to Plead Guilty to Bid Rigging and Fraud Conspiracies at Public Foreclosure Auctions.

Sacramento Feds Score Another Guilty Plea As 5th Defendant Goes Down In Foreclosure Sale Bid Rigging Conspiracy

In Sacramento, California, the San Jose Mercury News reports:

• Federal prosecutors say a Northern California man has pleaded guilty to conspiring to rig bids at foreclosure auctions in a county among the hardest hit by the real estate bust. The U.S. Attorney's Office for the Eastern District of California says 38-year-old Yama Marifat of Pleasanton pleaded guilty Friday to the conspiracy.

• Prosecutors say Marifat and a group of real estate speculators agreed not to bid against each other at San Joaquin County public foreclosure auctions to keep prices down. The group would then hold a private auction where the property went to the conspirator willing to pay the most above the public price. The speculators would split the difference between the prices at public and private auction as a payoff among themselves.

• Marifat faces up to 10 years in prison for bid rigging and 30 years for mail fraud, plus fines up to at least $2 million. The U.S. Attorney's Office says Marifat is the fifth person to plead guilty in connection with the conspiracy, which was uncovered as part of an ongoing federal investigation into fraud and bid-rigging in real estate auctions in San Joaquin County.(1)

Source: Calif man pleads guilty to foreclosure bid rigging.

For the U.S. Attorney press release, see Real Estate Investor Pleads Guilty to Bid Rigging at Public Foreclosure Auctions.

Go here for other posts & links on bid rigging at foreclosure and other real estate-related auctions.

(1) Anyone with information concerning bid rigging or fraud related to real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Office at 415-436-6660, visit www.justice.gov/atr/contact/newcase.htm, the United States Attorney’s Office for the Eastern District of California at 916-554-2700 or the FBI’s Sacramento Division at 916-481-9110.

Score Update In N. California Foreclosure Sale Auction Bid-Rigging Probe: Antitrust Feds 52, Real Estate Investors 0; One More Suspect Waves White Flag While 20 Others Remain Targeted & In Hot Water

From the U.S. Department of Justice (Washington, D.C.):

• A Northern California real estate investor has agreed to plead guilty for his role in bid rigging and fraud conspiracies at public real estate foreclosure auctions in Northern California, the Department of Justice announced.
  
  Felony charges were filed [] in the U.S. District Court of the Northern District of California in Oakland against Ramin Yeganeh of San Mateo, California. To date, 52 individuals have pleaded guilty or agreed to plead guilty to criminal charges as a result of the department’s ongoing antitrust investigations into bid rigging and fraud at public foreclosure auctions in Northern California.
  
  In addition, 20 other real estate investors have been charged in five multi-count indictments for their roles in bid rigging and fraud schemes at foreclosure auctions in Alameda, Contra Costa, San Mateo and San Francisco counties.
  
  Our Northern California real estate investigations have yielded more pleas than any other Antitrust Division matter in recent memory, but our work is not done,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division. “The sheer number of individuals involved in these conspiracies only emphasizes how critical it is that we remain committed to investigating and prosecuting those who have corrupted the public foreclosure auction process.”
  
  According to court documents, beginning as early as May 2008 and continuing until about October 2010, Yeganeh conspired with others not to bid against one another, and instead designate a winning bidder to obtain selected properties at public real estate foreclosure auctions in Alameda County. Yeganeh was also charged with conspiring to use the mail to carry out a scheme to fraudulently acquire title to selected Alameda County properties sold at public auctions, to make and receive payoffs, and to divert money to co-conspirators that would have otherwise gone to mortgage holders and other beneficiaries by holding second, private auctions open only to members of the conspiracy. Selected properties were then awarded to the conspirators who submitted the highest bids in the second, private auctions. The private auctions often took place at or near the courthouse steps where the public auctions were held.
  
  “These charges demonstrate our continued commitment to investigate and prosecute individuals and organizations responsible for the corruption of the public foreclosure auction process,” said FBI Special Agent in Charge David J. Johnson of the FBI’s San Francisco Field Office. “The FBI is committed to work these important cases and remains unwavering in our dedication to bring the members of these illegal conspiracies to justice.”
  
  A violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine for the Sherman Act charges may be increased to twice the gain derived from the crime or twice the loss suffered by the victims if either amount is greater than $1 million. A count of conspiracy to commit mail fraud carries a maximum sentence of 30 years in prison and a $1 million fine. The government can also seek to forfeit the proceeds earned from participating in the conspiracy to commit mail fraud.
  
  Today’s charges are the latest filed by the department in its ongoing investigation into bid rigging and fraud at public real estate foreclosure auctions in San Francisco, San Mateo, Contra Costa and Alameda counties, California. These investigations are being conducted by the Antitrust Division’s San Francisco Office and the FBI’s San Francisco Office. Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Office at 415-934-5300, or call the FBI tip line at 415-553-7400.

Source: Northern California Real Estate Investor Agrees to Plead Guilty to Bid Rigging and Fraud Conspiracies at Public Foreclosure Auctions.

For the formal charges, see USA v. Yeganeh.

Two More Atlanta-Area Real Estate Operators Find Themselves In Hot Water In Ongoing Federal Probe Into Foreclosure Sale Bid Rigging Rackets

From the U.S. Department of Justice (Washington, D.C.):

• A federal grand jury in Atlanta charged in separate indictments two real estate investors with bid rigging and bank fraud related to public real estate foreclosure auctions in Georgia, the Justice Department announced [].
  
  Real estate investor Douglas L. Purdy [indictment here] has been charged with one count of bid rigging and five counts of bank fraud for participating in the alleged conspiracy and scheme at Forsyth County, Georgia, foreclosure auctions from 2008 to 2012.
  
  Clifford Wayne Hill [indictment here] was charged with one count of bid rigging and seven counts of bank fraud related to public foreclosure auctions in Gwinnett County, Georgia, from 2007 to 2012. The defendants and their co-conspirators allegedly rigged bids at public foreclosure auctions and defrauded banks that owned the mortgage notes.
  
  Among other methods, the conspirators allegedly held secret “second auctions” of properties they had obtained through rigged bids, dividing the auction proceeds that should have gone to pay off debts against the properties and, in some cases, to homeowners who had defaulted.
  
  ***
  Including the indictments filed today in the Northern District of Georgia, 14 defendants have been charged in connection with the department’s ongoing investigation into bid rigging and fraudulent schemes involving real estate foreclosure auctions in the Atlanta area; 12 have pleaded guilty.
  
  ***
  Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Washington Criminal II Section of the Antitrust Division at 202-598-4000, call the Antitrust Division’s Citizen Complaint Center at 888-647-3258, or visit http://www.justice.gov/atr/report-violations.

For more, see Two Georgia Real Estate Investors Indicted for Bid Rigging and Bank Fraud at Public Home Foreclosure Auctions.

Another Real Estate Investor Gets Caught In Antitrust Feds' Crosshairs w/ Indictment In Ongoing Squeeze Targeting Bid-Rigging Activities At Foreclosure Sale Public Auctions

From the U.S. Department of Justice (Washington, D.C.):

• A federal grand jury in Raleigh, North Carolina, returned a one-count indictment against a real estate investor, charging him with conspiracy to commit mail fraud as part of a scheme related to public real estate foreclosure auctions, the Department of Justice announced [].
  
  The indictment, filed in U.S. District Court of the Eastern District of North Carolina on March 18, 2015, charges real estate investor Rodney S. Daw, of Raleigh, with conspiracy to commit mail fraud affecting a financial institution. The department alleged that the scheme defrauded homeowners, financial institutions and others with a legal interest in selected foreclosure properties, for the unlawful purpose of obtaining money and property through fraudulent pretenses, representations or promises.
  
  The indictment charges Daw with conspiring with others to, among other things, make and receive payoffs from co-conspirators in exchange for agreements not to compete in public auctions, and to divert money away from homeowners, financial institutions and others with a legal interest in selected properties. Several financial institutions suffered actual monetary losses as a result of the conspiracy. According to the indictment, Daw participated in the mail fraud conspiracy beginning at least as early as December 2002 and continuing until at least April 2005.
  
  “This action marks the fourth state in which a defendant has been indicted in our ongoing investigation into illegal conduct at public real estate foreclosure auctions,” said Assistant Attorney General Bill Baer of the Antitrust Division. “We will continue to vigorously pursue those individuals who sought to capitalize on this nation’s financial crisis by seeking personal gain at the expense of homeowners and financial institutions.”
  
  “This federal indictment illustrates the FBI’s commitment toward assisting the U.S. Department of Justice’s Antitrust Division in ensuring that those who engage in real estate investments and transactions do so on a level playing field,” said Special Agency in Charge J. Britt Johnson of the FBI’s Atlanta Field Office. “The FBI asks that anyone with information regarding such activities as alleged in this indictment contact their nearest FBI field office.”
  
  To date, two individuals have pleaded guilty in connection with the department’s ongoing investigation into bid rigging and fraudulent schemes in the North Carolina real estate foreclosure auction industry.
  
  The charge of conspiracy to commit mail fraud affecting a financial institution carries a maximum penalty of 30 years in prison and a $1 million fine.
  
  This charge stems from an ongoing investigation being conducted by the Antitrust Division’s Washington Criminal II Section and the FBI’s Atlanta Field Office, with the assistance of the U.S. Attorney’s Office of the Eastern District of North Carolina. Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions in North Carolina should contact the Washington Criminal II Section of the Antitrust Division at 202-598-2507, [...](1)

Source: North Carolina Real Estate Investor Indicted for Conspiracy to Commit Mail Fraud.

Go here for earlier posts on foreclosure sale bid rigging rackets.

(1) As has been pointed out in earlier posts, suspects who have been pinched on bid-rigging charges and are considering copping guilty pleas should first consider whether their alleged unlawful bid rigging racket was really nothing more than an innocent, lawful joint bidding endeavor. See Illegal Bid Rigging Racket? Or Mere Innocent 'Joint Bidding' Arrangement?

Antitrust Feds Continue Racking Up Guilty Pleas In Northern California & Atlanta-Area Foreclosure Sale Bid-Rigging Probes; Public Urged To Come Forward With Any Information Regarding Real Estate Public Auction Hanky Panky

The following excerpts are from two separate recent news releases from the U.S. Department of Justice:

#1 - Northern California:

• A Northern California real estate investor has agreed to plead guilty for his role in conspiracies to rig bids at public real estate foreclosure auctions in Northern California, the Department of Justice announced.
  
  Felony charges were filed [] in the U.S. District Court for the Northern District of California in Oakland against Wayne Lippman of Walnut Creek, California. To date, as a result of the department’s ongoing antitrust investigations into bid rigging and fraud at public real estate foreclosure auctions in Northern California, 55 individuals have agreed to plead or have pleaded guilty.
  
  According to court documents, between August 2008 and January 2011, Lippman conspired with others not to bid against one another and instead to designate a winning bidder to obtain selected properties at public real estate foreclosure auctions in Alameda and Contra Costa counties. Lippman made and received payoffs for the agreements not to bid, diverting money that would have otherwise gone to mortgage holders and other beneficiaries.
  
  
  ***
  
  [These] charges are the latest filed by the department in its ongoing investigation into bid rigging and fraud at public real estate foreclosure auctions in San Francisco, San Mateo, Alameda and Contra Costa counties, California. These investigations are being conducted by the Antitrust Division’s San Francisco Office and the FBI’s San Francisco Office. Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Office at 415-934-5300, or call the FBI tip line at 415-553-7400.

For more, see Northern California Real Estate Investor Agrees to Plead Guilty to Bid Rigging at Public Foreclosure Auctions.

For the formal charges, see USA v. Lippman.

------------------------------------------------

#2 - Atlanta, Georgia

• A Georgia real estate investor pleaded guilty [] for his role in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Georgia, the Department of Justice announced.
  
  Felony charges against Eric Hulsman were filed [] in the U.S. District Court of the Northern District of Georgia in Atlanta. According to court documents, from at least as early March 6, 2007, and continuing at least until Dec. 6, 2011, in Fulton County, Georgia, and from at least as early as Jan. 2, 2007, and continuing at least until Jan. 1, 2008, in DeKalb County, Georgia, Hulsman conspired with others not to bid against one another, but instead designated a winning bidder to obtain selected properties at public real estate foreclosure auctions.
  
  Hulsman was also charged with a conspiracy to use the mail to carry out a scheme to fraudulently acquire title to selected Fulton and DeKalb properties sold at public auctions, to make and receive payoffs and to divert money to co-conspirators that would have gone to mortgage holders and others by holding second, private auctions open only to members of the conspiracy. The selected properties were then awarded to the conspirators who submitted the highest bids in the second, private auctions.
  
  
  ***
  
  The primary purpose of the conspiracies was to suppress and restrain competition and to conceal payoffs in order to obtain selected real estate offered at Fulton and DeKalb county public foreclosure auctions at non-competitive prices. When real estate properties are sold at these auctions, the proceeds are used to pay off the mortgage and other debt attached to the property, with remaining proceeds, if any, paid to the homeowner. According to court documents, these conspirators paid and received money that otherwise would have gone to pay off the mortgage and other holders of debt secured by the properties, and in some cases, the defaulting homeowner.
  
  
  ***
  
  A violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine for a Sherman Act charge may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime if either amount is greater than the statutory maximum fine. A count of conspiracy to commit mail fraud carries a maximum penalty of 20 years in prison and a fine in an amount equal to the greatest of $250,000, twice the gross gain the conspirators derived from the crime or twice the gross loss caused to the victims of the crime by the conspirators.
  
  Including Hulsman, eight cases have been filed as a result of the ongoing investigation being conducted by Antitrust Division’s Washington Criminal II Section and the FBI’s Atlanta Division, and the U.S. Attorney’s Office of the Northern District of Georgia. Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions in Georgia should contact Washington Criminal II Section of the Antitrust Division at 202-598-4000, call the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258 or visit www.justice.gov/atr/contact/newcase.htm.

For more, see Georgia Real Estate Investor Pleads Guilty to Bid Rigging and Fraud Conspiracies at Public Foreclosure Auctions.

For the formal charges, see USA v. Hulsman.

Antitrust Feds Squeeze Guilty Pleas From Pair Accused Of Sherman Act Violations Involving Bid Rigging At Northern Georgia Foreclosure Sale Auctions

From the U.S. Department of Justice (Washington, D.C.):

• Two Georgia real estate investors pleaded guilty [] for their roles in a conspiracy to rig bids and commit mail fraud at public real estate foreclosure auctions in Georgia, the Department of Justice announced.
  
  Separate felony charges were filed against Mohammad Adeel Yoonas and Kevin Shin on Dec. 23, 2014, in the U.S. District Court for the Northern District of Georgia in Atlanta. According to court documents, from at least as early as April 2008 until at least March 2012, Yoonas conspired with others not to bid against one another, but instead designated a winning bidder to obtain selected properties at public real estate foreclosure auctions in Gwinnett County, Georgia. Yoonas was also charged with a conspiracy to use the mail to carry out a scheme to fraudulently acquire titles to selected Gwinnett County properties sold at public auctions, to make and receive payoffs and to divert money to co-conspirators that would have gone to mortgage holders, homeowners and others by holding second, private auctions open only to members of the conspiracy. The department said that the selected properties were then awarded to the conspirators who submitted the highest bids in the second, private auctions.
  
  Shin, according to court documents, conspired with others not to bid against one another, but instead designated a winning bidder to obtain selected properties at public real estate foreclosure auctions in Gwinnett County from at least as early as March 2009 until at least March 2012. Shin was also charged with a conspiracy to use the mail to carry out a scheme to fraudulently acquire title to selected Gwinnett County properties sold at public auctions, to make and receive payoffs and to divert money to co-conspirators that would have gone to mortgage holders, homeowners and others by holding second, private auctions open only to members of the conspiracy. The department said that the selected properties were then awarded to the conspirators who submitted the highest bids in the second, private auctions.
  
  “These six guilty pleas result from the Antitrust Division’s ongoing investigation into schemes to rig public real estate foreclosure auctions in Georgia,” said Assistant Attorney General Bill Baer for the Department of Justice’s Antitrust Division. “The division will continue working with its law enforcement partners to expose cartels that harm distressed homeowners and lenders.”
  
  The department said that the primary purpose of the conspiracies was to suppress and restrain competition and to conceal payoffs in order to obtain selected real estate offered at Gwinnett County public foreclosure auctions at non-competitive prices. When real estate properties are sold at these auctions, the proceeds are used to pay off the mortgage, and other debt attached to the property, with remaining proceeds, if any, paid to the homeowner. According to court documents, these conspirators paid and received money that otherwise would have gone to pay off the mortgage and other holders of debt secured by the properties, and, in some cases, the defaulting homeowner.
  
  “The criminal actions of the defendants in this case provide a clear example of why enforcement of the Sherman Act remains necessary in maintaining a level and competitive field within commerce,” said Special Agent in Charge J. Britt Johnson for the FBI Atlanta Field Office. “The FBI will continue to work with the U.S. Department of Justice’s Antitrust Division in identifying such financial schemes that attempt to take unfair advantage, to include those targeting the foreclosure auction process.”
  
  A violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine for a Sherman Act charge may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime if either amount is greater than the statutory maximum fine. A count of conspiracy to commit mail fraud carries a maximum penalty of 20 years in prison and a fine in an amount equal to the greatest of $250,000, twice the gross gain the conspirators derived from the crime or twice the gross loss caused to the victims of the crime by the conspirators.(1)
  
  The investigation is being conducted by Antitrust Division’s Washington Criminal II Section and the FBI’s Atlanta Division, with the assistance of the Atlanta Field Office of the Housing and Urban Development Office of Inspector General and the U.S. Attorney’s Office for the Northern District of Georgia. Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions in Georgia should contact Washington Criminal II Section of the Antitrust Division at 202-598-4000, call the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258, or visit www.justice.gov/atr/contact/newcase.htm.

For more, see Georgia Real Estate Investors Plead Guilty to Bid Rigging and Fraud at Public Foreclosure Auctions.

Go here for earlier posts on foreclosure sale bid rigging rackets.

(1) As has been pointed out here in earlier posts, suspects who have been pinched on bid-rigging charges and are considering copping guilty pleas should first consider whether their alleged unlawful bid rigging racket was really nothing more than an innocent, lawful joint bidding endeavor. See Illegal Bid Rigging Racket? Or Mere Innocent 'Joint Bidding' Arrangement?