Happy New Years Eve!
The Department of Justice announced today that a Real Estate Investor pleaded guilty to 11 counts of fraud related to bid rigging at public real estate foreclosure auctions.
You can see the press release here
The Crime
According to the press release,
A private investor, Joachim, conspired with others not to bid against one another at foreclose auctions and to instead designate a winning bidder to obtain selected properties at public real estate foreclosure auctions in San Joaquin County.
Joachim was also charged with conspiring to use the mail to carry out a scheme to fraudulently acquire title to selected San Joaquin 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 others by holding second, private auctions open only to members of the conspiracy
The Effect
According to the DOJ: 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 San Joaquin County public foreclosure auctions at non-competitive prices.
The result is that funds that should have gone to pay off lien holders, and homeowners is diverted to the private investors involved in the bid rigging.
The Penalty
Joachim 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.
Joachim also pleaded guilty to conspiracy to commit mail fraud, which carries a maximum sentence of 30 years in prison and a $1 million fine.
The Task Force
The investigation was conducted by the President’s Financial Fraud Enforcement Task Force. According to the DOJ, “The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.”
Question:
What type of bid rigging (if any) do you believe is going on in your state? In Michigan, for instance, where there has been record numbers of foreclosed properties since 2008, there has been a market for flipping and rehabbing residential real estate. This has also created opportunities for scam artists, including loan modification companies, and other individuals looking to purchase owners remainder interests in their home with the promise of allowing them to “buy back” their home after passing them the deed. These are just a few examples.
Feel free to email me with any questions or comments:
Jeshua@dwlawpc.com
Purpose Driven General Counsel 