Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Alabama businessman pleads guilty to rigging bids at real estate foreclosure auctions, (Sep 2, 2015)

By Jeffrey May, J.D.

The Department of Justice Antitrust Division's investigation into fraud and bid rigging in the Alabama real estate foreclosure industry has netted its 11th guilty plea from an individual investor. Michael P. Barbour, a southern Alabama businessman, has pleaded guilty for his role in conspiracies to rig bids and commit mail fraud at public foreclosure auctions in southern Alabama (U.S. v. Barbour, Case 1:15-cr-00187-WS).

According to the two-count charge filed under seal in the federal district court in Mobile on August 26, Barbour conspired to rig bids in order to obtain selected properties offered at public foreclosure auctions between 2003 and 2010. Once a bidder who was designated the winning bidder among the conspirators won the property at the public auction, the conspirators held a secret, second auction open only to members of the conspiracy where they paid each other off, the government alleged. Barbour, who was engaged in the business of buying real estate for resale or rental, also was charged with conspiring to commit mail fraud as part of the bid rigging scheme. Barbour purchased properties in his own name and through two companies: Dos Amigos, LLC and CM1, LLC.

Under the plea agreement, the Justice Department has recommended that Barbour be sentenced to a period of imprisonment of not more than 18 months and fined no more than $20,000. The plea agreement also requires Barbour to pay restitution of approximately $104,000.

Long-running investigation. The case against Barbour is the first new charge in the government's long-running Alabama foreclosure industry investigation in well over a year, and most of the cases were brought in 2011 and 2012. In March 2014, the tenth individual—Chad E. Foster—was indicted for conspiring to commit mail fraud as a result of the investigation. The former real estate investor pleaded guilty in October of that year. In August 2013, another investor, Ali Forouzan, was charged with making a false statement to government officials in connection with the criminal grand jury investigation. The trickle of cases in the last two years likely signals that the antitrust investigation of the Alabama real estate foreclosure industry is coming to a close.

Attorneys: Deana L. Timberlake-Wiley and Susan A. Musser for U.S. Department of Justice Antitrust Division. Neil Hanley for Michael P. Barbour.

Companies: Dos Amigos, LLC; CM1, LLC

News: Antitrust AntitrustDivisionNews