From HW:
Three Northern California real estate investors agreed to plead guilty to forming a conspiracy to rig bids at foreclosure auctions, the Department of Justice Financial Fraud Enforcement Division said Thursday.
Charges were filed in the U.S. District Court for the Northern District of California against Barry Heisner of Brentwood, CA; Dominic Leung of Alameda, CA; and Hilton Wong of San Ramon, CA.
The Department of Justice says the three defendants conspired with others to obtain favorable auction selling prices by agreeing not to bid against each other in certain circumstances and by selecting a winning bidder for each auction item in advance. Authorities say the defendants carried out these activities at various real estate auctions, spanning from August 2008 to January 2011.
Authorities claim Heisner, Leung and Wong also committed mail fraud by fraudulently acquiring title to properties sold at public auctions and then by holding second, private auctions open only to members of the conspiracy. The properties selected were then given to the conspirators who submitted the highest bids.
Some of the violations related to the uncompetitive practices are breaches of the Sherman Act, which carry a maximum penalty of 10 years in prison and a $1 million fine. Each count of conspiracy to commit mail fraud carries a maximum sentence of 30 years in prison and a $1 million fine.
The FBI and the antitrust division have been working on California auction rigging cases for the past year. In October, two real estate investors pleaded guilty to bid rigging in the counties of Contra Costa and Alameda.
It sounds like they have a pretty good case for the conspiracy charges, but it’s hard to believe that a handful of conspirators could have any significant impact on prices realized unless there was some unmentioned way for them to discourage others from bidding. Alameda and Contra Costa are urban and suburban; there would be a large potential bidder pool for public auctions.
Taken to its logical conclusion, flippers who make profits are next in line as they obviously paid too little at the auction.
In all seriousness, who cares. The bank got the amount they needed given their ability to put in a credit bid at any amount (above or below what they are owed). They either got the amount they want or got the asset.
Not sure who is harmed? Isn’t this just ‘flipper on flipper’ crime??? And who really loses sleep over that.
clearfund – seriously ?
When bidders rig, the seller is the loser. Whether it’s a private party or an evil banker / NGO / etc, this is still fraud. If you’re selling your house or your car, do you really want the bidders to conspire against you ?
Seriously.
If all you have is 5 flippers bidding on the residence, you are screwed. The steps is a ‘big boys’ game so set your credit bid or take the property back, hire a good realtor, fix it up, and sell it for 95% of retail.
Not feeling sorry for anyone at the courthouse steps (banks or investors). Its a cutthroat place/business and only the tough survive. That is exactly why I don’t play in that arena, regardless of the collusion or not. Its a suckers bet to bid against multiple parties and ultimately against yourself. The “winner” pays the most so are they really the winner or just the owner of an overpriced asset?
You are far better playing in an area where you have a special skill, ability, connection, that you can leverage for a below market price.
You want higher prices, let financing happen or give 5 days to ‘close’ then you’d get real competition.
It’s only a suckers bet for the inexperienced. Mistakes are only made Without the right ground crew in place that understand true value. There are plenty of markets to capitalize on at auction. It’s just not San Diego, Phoenix, or Vegas..
I’m with clearfund on this. Let’s see, spend law enforcement time on bid-rigging at courthouse steps, or go after short sale fraud? Decision, decisions….
In modern ScameriKa, conspiracy is how business if done.
“Nothin’ personal, just business.” 😉