California investors plead guilty to foreclosure-auction bid rigging
Two real estate investors in California pleaded guilty to rigging foreclosure auctions in an attempt to gain distressed properties at bargain prices, the Department of Justice said Tuesday. The scheme took place in the California counties of Contra Costa and Alameda. The two men — Eric Larsen of San Leandro, Calif., and Timothy Powers of Alamo, Calif., — are accused of committing mail fraud and of conspiring to rig bids by pulling in other conspirators who agreed to keep bidding prices low by not bidding against each other, according to the DOJ. The mail fraud charge is tied to allegations that the investors used the mail to carry out their scheme by diverting money to co-conspirators in a fraud that ended up taking money from mortgage holders and other parties that did not get to bid in a fair and transparent environment. The two investors apparently held private auctions that were only open to conspiracy members, thereby suppressing prices. "These private auctions took place at or near the courthouse steps where the public auctions were held," the Department of Justice alleged in a press release. “The FBI and the antitrust division are partners in the fight to bring to justice those who engage in fraudulent anti-competitive practices at foreclosure auctions,” said FBI special agent in charge Stephanie Douglas. “We are committed to holding those individuals accountable for the damage they have done to the real estate market and to unsuspecting victims.” Each violation of the Sherman Antitrust Act could result in a maximum sentence of 10 years in prison and a $1 million fine, while each conspiracy to commit mail fraud could carry a maximum sentence of 30 years and a $1 million fine. Write to Kerri Panchuk.