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From Antitrust Law Daily, October 9, 2013

California real estate investors denied separate trials in U.S. bid rigging action

By Jeffrey May, J.D.

In a criminal action against three real estate investors and an auctioneer for participating in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions held in California’s San Joaquin County, a motion by two of the defendants to sever the trials has been denied. The federal district court in Sacramento also denied an alternative request from defendants Anthony B. Joachim and Donald M. Parker to sever an obstruction of justice count asserted against defendant Andrew B. Katakis only (U.S. v. Katakis, October 8, 2013, Shubb, W.).

The Justice Department originally charged four investors—Katakis, Parker, Joachim, and Wiley C. Chandler—along with auctioneer W. Theodore Longley in 2011 with bid rigging and conspiracy to commit mail fraud. The government alleged that the conspiracies lasted from approximately September 2008 until October 2009. The indictment also charged the auctioneer with aiding and abetting the conspirators. In February 2012, Chandler pleaded guilty to the charges.

In May 2013, a federal grand jury returned a superseding indictment, adding the obstruction of justice charge against Katakis. According to the newly added charge, after Katakis received a letter notifying him that a federal grand jury had subpoenaed his bank account, he deleted and caused others to delete electronic records and documents related to the conspiracies. The superseding indictment alleged that Katakis also installed and caused others to install and use a software program that overwrote deleted electronic records and documents so that they could not be viewed or recovered.

After the new superseding indictment was handed down, Joachim moved to sever his case from co-defendant Katakis or, alternatively, to sever the obstruction count against Katakis from the joint trial. Parker later joined in the motion. These defendants argued that the evidence relating to the obstruction count would jeopardize their right to a fair trial on the bid rigging and mail fraud conspiracy counts.

Generally, defendants who are jointly charged are jointly tried, the court observed. The defendants did not present any persuasive argument to compel a departure from these general principles. The court noted that it could address the defendant’s concerns through proper limiting instructions to the jury. The jury would be able to compartmentalize the evidence as it related to the separate defendants with respect to the obstruction count, in the court’s view.

A trial is expected in early 2014.

This is Case No. 2:11-cr-00511-WBS.

Attorneys: Anna Tryon Pletcher and Tai Snow Milder for U.S. Department of Justice. Paul Joseph Pfingst (Higgs Fletcher & Mack LLP) for Andrew B. Katakis.

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