Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Former real estate investor indicted in probe of Alabama foreclosure auctions, (Apr 1, 2014)

By Jeffrey May, J.D.

In connection with an ongoing investigation into bid rigging and fraudulent schemes in the Alabama real estate foreclosure auction industry, a former real estate investor has been charged with conspiring to commit mail fraud, the Department of Justice Antitrust Division announced yesterday. A federal grand jury in Mobile, Alabama, returned a one-count indictment against Chad E. Foster on March 27. The indictment was entered in the court on March 31 (U.S. v. Foster, Case 1:14-cr-00067-WS).

According to the indictment, the challenged conduct took place between February 2005 and January 2007. Foster allegedly conspired with others to, among other things, conduct secret, second auctions open only to members of the conspiracy, to make payoffs to and receive payoffs from co-conspirators, and to divert money away from financial institutions, homeowners and others with a legal interest in selected properties. The conduct caused artificially suppressed purchase prices to be paid to financial institutions and others with a legal interest in selected properties, it was alleged.

To date, nine individuals and two companies have pleaded guilty in connection with this ongoing investigation, according to the Justice Department. Most of the charges were filed in 2011 and 2012. In August 2013, Ali Forouzan, an auction participant, was charged with making false statements to Antitrust Division and the Federal Bureau of Investigation (FBI) investigators about his knowledge of, and participation in, the fraudulent schemes under investigation in Alabama.

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