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From Antitrust Law Daily, June 18, 2013

Thirty-First Real Estate Investor Agrees to Plead Guilty to Bid Rigging at Northern California Public Foreclosure Auctions

By Tobias J. Gillett, J.D., LL.M.

Real estate investor Robert Williams of Atherton, California is the 31st individual to plead guilty or agree to plead guilty to bid rigging and fraud at Northern California public real estate foreclosure auctions, as a result of the U.S. Department of Justice’s ongoing antitrust investigation, the Department of Justice has announced. A two-countfelony charge against Williams was filed today in the federal district court in San Francisco.

Starting as early as October 2009 and continuing until about December 2010, Williams conspired with others to refrain from bidding against one another and to designate a winning bidder to obtain selected properties at public real estate foreclosure auctions in the Northern California county of San Mateo, according to court documents. In addition, Williams was charged with conspiracy to use the mail to carry out a scheme to fraudulently acquire title to selected properties sold at public auction, to make and receive payoffs, and to divert to co-conspirators money that otherwise would have gone to mortgage holders and others.

The primary purpose of these conspiracies was to suppress and restrain competition and to conceal payoffs in order to obtain selected real estate offered at foreclosure auctions at non-competitive prices, the department said. The proceeds of foreclosure sales are used to pay off the mortgage and other debt attached to the property, and any remaining proceeds are paid to the homeowner. Thus, the conspirators paid and received money that otherwise would have gone to pay off the mortgage and other debt secured by the property and, in some cases, the defaulting homeowner, court documents stated.

"Collusion at these foreclosure auctions enabled the conspirators to present the illusion of competition, when they were actually thwarting the competitive process and profiting at the expense of lenders and distressed homeowners," said Bill Baer, Assistant Attorney General in charge of the Department of Justice's Antitrust Division. "The division remains committed to holding accountable those who illegally subvert competition at real estate foreclosure auctions across the country."

A charge of violating the Sherman Act carries with it a maximum penalty of 10 years in prison and a $1 million fine for individuals, with the fine 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 charge of conspiracy to commit mail fraud carries with it a maximum sentence of 30 years in prison and a $1 million fine, as well as forfeiture of proceeds earned from participating in the conspiracy.

The San Francisco offices of the Federal Bureau of Investigation and the Antitrust Division have conducted the ongoing investigation in coordination with President Obama’s Financial Fraud Enforcement Task Force, which was created in 2009.

"The legitimacy of an open, public real estate foreclosure auction is compromised when an individual or group conspires to commit criminal activity which impacts genuine intentions of good citizens," said David J. Johnson, FBI Special Agent in Charge of the San Francisco Field Office. "We are steadfast in our continued partnership with the Antitrust Division in bringing those criminally responsible to justice."

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