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From Antitrust Law Daily, August 14, 2017

Trial set for January in U.S. case against five California real estate investors

By Jeffrey May, J.D.

A jury trial has been set to begin on January 16, 2018, in a Department of Justice Antitrust Division action against five California real estate investors. The five individuals—Joseph J. Giraudo, Raymond A. Grinsell, Kevin B. Cullinane, James F. Appendrodt, and Abraham S. Farag—were named in an eight-count indictment handed down in 2014 over their alleged role in bid rigging and fraud at public real estate foreclosure auctions in Northern California. All five were charged with participating in schemes impacting foreclosure auctions in California's San Mateo County, and three of the five allegedly engaged in bid rigging and fraud related to San Francisco County auctions. While these defendants were previously successful in their efforts to suppress the government’s audio recordings of their allegedly incriminating conversations on the courthouse steps, they have been unable to bar evidence that was gathered following the surreptitious recordings (U.S. v. Giraudo, Criminal No. 3:14-cr-00534-WHO).

Dozens of individuals have been charged in the Justice Department’s long-running antitrust investigation of real estate foreclosure auctions in northern California. According to the Justice Department more than 60 individuals have either pleaded guilty or been convicted after trial. Most pleaded guilty. However, there were a number of cases that went to trial. Three other real estate investors—Michael Marr, Javier Sanchez, and Gregory Casorso—who also were indicted in 2014 were recently convicted of conspiring to rig bids at the auctions. Earlier in the year, a federal jury convicted Thomas Joyce on similar charges.

Giraudo, Grinsell, Cullinane, Appendrodt, and Farag are among the last remaining targets of the probe who are awaiting trial.

Evidentiary ruling. The federal district court in San Francisco set the trial date after denying last month the defendants’ motion to suppress evidence that was purportedly tainted because it flowed from unlawful stationary audio recordings of the conspirators’ conversations. The defendants had asked the court to exclude all evidence gathered after the day the government began using stationary recording devices under the fruit-of-the-poisonous-tree doctrine. Earlier, the court had suppressed audio recordings that the Federal Bureau of Investigation surreptitiously collected, without judicial authorization, at the San Mateo County Courthouse. These recordings cannot be used at trial. The parties provided the court with additional briefing on what evidence, if any, was tainted by the now-suppressed stationary audio recordings. The court rejected the defendants’ arguments.

It was not enough that the underlying violation contributed in some way to the discovery of the challenged evidence, the court explained. It had to be that, but for the violation, the government would not have obtained the evidence at all. Even if there were a "factual nexus between" the stationary audio recordings and subsequently discovered pieces of evidence, the recordings were not a but-for cause of the discovery of the additional evidence, in the court’s view.

Now, the five defendants headed to trial will face what the court described as "a heap of incriminating evidence, including detailed records of hundreds of payoff agreements." A number of conspirators identified in the scheme based on that evidence had pleaded guilty in the months that followed, it was noted. Several of these conspirators reportedly implicated the defendants in collusive activity.

The case is No. 14-CR-534 CRB.

Attorneys: Alexis Jane Loeb, U.S. Department of Justice, for the United States. Matthew J. Jacobs (Vinson & Elkins LLP) for Joseph J. Giraudo.

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