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

The following information is from the FBI:

Charges were filed today in U.S. District Court in Oakland, against Eric Larsen of San Leandro, and Timothy Powers of Alamo, for their participation in bid-rigging and mail-fraud conspiracies at public real estate foreclosure auctions in Contra Costa and Alameda counties. Powers is charged with participating in the conspiracy in Contra Costa from as early as May 2009 until about December 2010, and Larsen is charged with participating in the conspiracy in Alameda County from as early as February 2009 until about January 2010.

“The Antitrust Division will vigorously pursue fraudulent schemes that eliminate competition from the marketplace and cause financial harm to victims,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The collusion taking place at these auctions preyed on the misfortune caused by the unprecedented rate of foreclosures and lined the pockets of colluding real estate investors with funds that otherwise would have gone to lenders and, at times, homeowners.”

“The FBI and the Antitrust Division are partners in the fight to bring to justice those who engage in fraudulent anticompetitive 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.”

The department said that the primary purpose of the conspiracies was to suppress and restrain competition and to conceal payoffs in auction records in order to obtain selected real estate offered at public foreclosure auctions in Alameda and Contra Costa counties at noncompetitive prices. When real estate properties are sold at these auctions, the proceeds are used to pay off the mortgage and other debt attached to the property, with remaining proceeds, if any, paid to the homeowner.

According to court documents, Larsen and Powers conspired with others not to bid against one another, but instead designate a winning bidder to obtain the title to selected real estate offered at public real estate foreclosure auctions in Contra Costa and Alameda counties. Larsen and Powers also were charged with conspiracies to use the mail to carry out a fraudulent scheme to divert money to co-conspirators away from mortgage holders and others by holding private auctions open only to members of the conspiracy and awarding the selected real estate to the conspirators who submitted the highest bids. These private auctions took place at or near the courthouse steps where the public auctions were held. The department said that Larsen and Powers also took steps to conceal the payoffs to conspirators for not bidding competitively and caused false and misleading statements to be made on records of public auctions regarding the total purchase price of the selected real estate.

Each violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. Each count of conspiracy to commit mail fraud carries a maximum sentence of 30 years in prison and a $1 million fine. The maximum fine for the Sherman Act charges may be increased to twice the gain derived from the crime or twice the loss suffered by the victim if either amount is greater than the $1 million statutory maximum.

The charges against Larsen and Powers are the latest cases filed by the department in its ongoing investigation into bid rigging and fraud at public real estate foreclosure auctions in Contra Costa County and Alameda County. To date, as a result of the investigation, 10 individuals have agreed to plead guilty.

The investigation into fraud and bid rigging at certain real estate foreclosure auctions in Northern California is being conducted by the Antitrust Division’s San Francisco Office and the FBI’s San Francisco office. Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Office at 415-436-6660, visit www.justice.gov/atr/contact/newcase.htm or call the FBI tip line at 415-553-7400.

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Article source: http://blog.sfgate.com/incontracosta/2011/09/30/local-investors-agree-to-plead-guilty-to-bid-rigging-at-foreclosure-auctions/

The men were charged with bid-rigging and conspiracy to commit mail fraud as part of a joint investigation by the FBI and the antitrust division of the Justice Department.

Investigators say the men conspired or made payoffs from 2008 through 2011 so they would not bid against each other for properties sold at foreclosure auctions in Alameda and Contra Costa counties. After one bought a property at an artificially low price, they would hold a private auction among themselves to resell it and split the extra money paid by the winning bidder.

“While the country faces unprecedented home foreclosure rates, the collusion taking place at these auctions is artificially driving down foreclosed home prices and is lining the pockets of the colluding real estate investors,” said Christine Varney, assistant attorney general in charge of the antitrust division, in a prepared statement.

The felony charges were filed in U.S. District Court for the Northern District of California, in Oakland. Court records did not list attorneys for the defendants or indicate whether they were in custody; court personnel said the cases were newly filed and they could not provide any information about them.

The men charged were:

- Thomas Franciose, of San Francisco

- William Freeborn, of Alamo

- Robert Kramer, of Oakland

- Thomas Legault, of Clayton

- David Margen, of Berkeley

- Brian McKinzie, of Hayward

- Jaime Wong, of Dublin

- Jorge Wong, of San Leandro

No Justice Department spokesperson could be reached to clarify whether the men were in custody, when they might enter a plea, their ages or other details. An FBI spokeswoman referred questions to the Justice Department.

Investigators said in a prepared statement that the charges were part of an ongoing investigation into collusion by real estate investors in foreclosure sales, both in Northern California and elsewhere.

In March, federal prosecutors said Yama Marifat of Pleasanton had pleaded guilty to conspiring to rig bids at foreclosure auctions in San Joaquin County, about 50 miles east of the Bay Area and one of the areas hardest hit by the housing bust. The scheme described was similar to that cited in the charges filed Thursday.

At the time, investigators said Marifat was the fifth person to plead guilty in connection with the probe, and he faced up to 10 years in prison for bid rigging and 30 years for conspiracy to commit mail fraud, plus fines of as much as $2 million.

It was unclear whether the new case was related to the earlier investigation.

Article source: http://www.sacbee.com/2011/06/30/3740033/calif-investors-to-plead-guilty.html

The real estate investors took part in conspiracies to rig bids by agreeing to refrain from bidding against one another at real estate foreclosure auctions in Contra Costa and Alameda counties, according to the Justice Department. Some participants actively engaged in conspiracies in both counties, but outside bidding activity occurred independently in each area.

Federal felony charges were filed in U.S. District Court in Northern California against the eight: Thomas Franciose of San Francisco; William Freeborn of Alamo, Calif.; Robert Kramer of Oakland, Calif.; Thomas Legault of Clayton, Calif.; David Margen of Berkeley, Calif.; Brian McKinzie of Hayward, Calif.; Jaime Wong of Dublin, Calif.; and Jorge Wong of San Leandro, Calif.

The case is the first prosecution brought through a new partnership of the FBI and the Antitrust Division in efforts to battle organized widespread auction bid-rigging and anticompetitive practices at real estate auctions.

The Antitrust Division and the FBI have identified a pattern of schemes among investors intended to eliminate competition at foreclosure auctions, according to federal sources. The charges are part of the department’s effort to combat bid rigging, which goes on at various auction sites throughout the country.

“While the country faces unprecedented home foreclosure rates, the collusion taking place at these auctions is artificially driving down foreclosed home prices and is lining the pockets of the colluding real estate investors,” said Christine Varney, assistant attorney general in charge of the Department of Justice’s Antitrust Division. “The Antitrust Division will vigorously pursue these kinds of collusive schemes that eliminate competition from the marketplace.”

The purpose of the conspiracies was to suppress competition and obtain homes and other properties at foreclosure auctions at greatly discounted prices, according to prosecutors. When real estate is sold at auction, proceeds are used to pay off the mortgage and other debts attached to the property.

Each violation carries a maximum penalty of 10 years in prison and a $1 million fine for each individual.

Article source: http://www.housingpredictor.com/2011/auction-bid-rigging.html

Eight California real estate investors have agreed to plead guilty in a bid-rigging scheme to buy foreclosed real estate at public auctions in two San Francisco Bay area counties, the U.S. Department of Justice said Thursday.

The men were charged with bid-rigging and conspiracy to commit mail fraud as part of a joint investigation by the FBI and the antitrust division of the Justice Department.

Investigators say the men conspired or made payoffs from 2008 through 2011 so they would not bid against each other for properties sold at foreclosure auctions in Alameda and Contra Costa counties. After one bought a property at an artificially low price, they would hold a private auction among themselves to resell it and split the extra money paid by the winning bidder.

“While the country faces unprecedented home foreclosure rates, the collusion taking place at these auctions is artificially driving down foreclosed home prices and is lining the pockets of the colluding real estate investors,” said Christine Varney, assistant attorney general in charge of the antitrust division, in a prepared statement.

The felony charges were filed in U.S. District Court for the Northern District of California, in Oakland. Court records did not list attorneys for the defendants or indicate whether they were in custody; court personnel said the cases were newly filed and they could not provide any information about them.

The men charged were:

_ Thomas Franciose, of San Francisco

_ William Freeborn, of Alamo

_ Robert Kramer, of Oakland

_ Thomas Legault, of Clayton

_ David Margen, of Berkeley

_ Brian McKinzie, of Hayward

_ Jaime Wong, of Dublin

_ Jorge Wong, of San Leandro

No Justice Department spokesperson could be reached to clarify whether the men were in custody, when they might enter a plea, their ages or other details. An FBI spokeswoman referred questions to the Justice Department.

Investigators said in a prepared statement that the charges were part of an ongoing investigation into collusion by real estate investors in foreclosure sales, both in Northern California and elsewhere.

In March, federal prosecutors said Yama Marifat of Pleasanton had pleaded guilty to conspiring to rig bids at foreclosure auctions in San Joaquin County, about 50 miles east of the Bay Area and one of the areas hardest hit by the housing bust. The scheme described was similar to that cited in the charges filed Thursday.

At the time, investigators said Marifat was the fifth person to plead guilty in connection with the probe, and he faced up to 10 years in prison for bid rigging and 30 years for conspiracy to commit mail fraud, plus fines of as much as $2 million.

It was unclear whether the new case was related to the earlier investigation.

Article source: http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2011/06/30/state/n162200D51.DTL

SACRAMENTO, Calif. –
Eight California real estate investors have agreed to plead guilty in a bid-rigging scheme to buy foreclosed real estate at public auctions in two San Francisco Bay area counties, the U.S. Department of Justice said Thursday.

The men were charged with bid-rigging and conspiracy to commit mail fraud as part of a joint investigation by the FBI and the antitrust division of the Justice Department.

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Investigators say the men conspired or made payoffs from 2008 through 2011 so they would not bid against each other for properties sold at foreclosure auctions in Alameda and Contra Costa counties. After one bought a property at an artificially low price, they would hold a private auction among themselves to resell it and split the extra money paid by the winning bidder.

“While the country faces unprecedented home foreclosure rates, the collusion taking place at these auctions is artificially driving down foreclosed home prices and is lining the pockets of the colluding real estate investors,” said Christine Varney, assistant attorney general in charge of the antitrust division, in a prepared statement.

The felony charges were filed in U.S. District Court for the Northern District of California, in Oakland. Court records did not list attorneys for the defendants or indicate whether they were in custody; court personnel said the cases were newly filed and they could not provide any information about them.

The men charged were:

_ Thomas Franciose, of San Francisco

_ William Freeborn, of Alamo

_ Robert Kramer, of Oakland

_ Thomas Legault, of Clayton

_ David Margen, of Berkeley

_ Brian McKinzie, of Hayward

_ Jaime Wong, of Dublin

_ Jorge Wong, of San Leandro

No Justice Department spokesperson could be reached to clarify whether the men were in custody, when they might enter a plea, their ages or other details. An FBI spokeswoman referred questions to the Justice Department.

Investigators said in a prepared statement that the charges were part of an ongoing investigation into collusion by real estate investors in foreclosure sales, both in Northern California and elsewhere.

In March, federal prosecutors said Yama Marifat of Pleasanton had pleaded guilty to conspiring to rig bids at foreclosure auctions in San Joaquin County, about 50 miles east of the Bay Area and one of the areas hardest hit by the housing bust. The scheme described was similar to that cited in the charges filed Thursday.

At the time, investigators said Marifat was the fifth person to plead guilty in connection with the probe, and he faced up to 10 years in prison for bid rigging and 30 years for conspiracy to commit mail fraud, plus fines of as much as $2 million.

It was unclear whether the new case was related to the earlier investigation.

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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