Real estate investors plead guilty of rigging auctions

Two real estate investors who do business in San Mateo County have pleaded guilty to mail fraud and rigging public foreclosure auctions outside the Redwood City courthouse by agreeing not to bid against each other, according to the Department of Justice.

Lydia Fong and Matthew Worthing, both of San Francisco, were charged yesterday in the case, joining 20 other individuals throughout four Bay Area counties who have pleaded guilty or agreed to plead guilty in similar bid rigging and public auction fraud cases.

According to federal prosecutors, Fong and Worthing conspired with others for varied stretches between October 2009 and January 2011. Worthing is also charged with participating in a similar San Francisco County conspiracy in September 2010.

During the scheme, those involved agree not to bid against each other for foreclosed properties auctioned off outside the county courthouse. Instead, they kept the winning price low which, in turn, federal prosecutors say, damaged the real estate market and defrauded those expecting a level playing field.

“The collusion taking place at these auctions eliminated competition from the marketplace and allowed the conspirators to profit from the financial distress of others,” said Sharis A. Pozen, acting assistant attorney general Sharis A. Pozen in charge of the DOJ Antitrust Division, in a written statement.

When property is auctioned, the proceeds pay off the mortgage and debt with any remaining money going to the homeowner. Squelching competitive bids limits how much money is available for both.

Fong and Worthing used the postal service to send title documents to others in the conspiracy, make and receive payoffs and divert money, leading to the mail fraud charges.

For their roles, the investors face up to a decade in federal prison and $1 million fine for violating the antitrust law known as the Sherman Act and up to 30 years and a similar fine for each count of conspiring to commit mail fraud.

The DOJ’s antitrust division has an ongoing investigation into bid rigging and fraud at public real estate foreclosure auctions in the Bay Area. Including Fong and Worthing, a total of 22 people have settled cases in San Mateo, San Francisco, Contra Costa and Alameda counties.

Anyone with information about bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Office at (415) 436-6660 or visit www.justice.gov/atr/contact/newcase.htm or call the FBI tip line at (415) 553-7400.

Michelle Durand can be reached by email: michelle@smdailyjournal.com or by phone: (650) 344-5200 ext. 102.

Article source: http://www.smdailyjournal.com/article_preview.php?id=233265&title=Real%20estate%20investors%20plead%20guilty%20of%20rigging%20auctions

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