Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Investor pleads guilty to bid rigging at public real estate auctions in California, (Feb 26, 2014)

By Jody Coultas, J.D.

A real estate investor, Charles Gonzales, pleaded guilty yesterday to charges of bid rigging and mail fraud in connection with public real estate foreclosure auctions in Northern California, the Department of Justice has announced (U.S. v. Gonzales, Criminal No. CR14-00099).

Gonzales and 43 others have now been charged as part of the Justice Department’s ongoing antitrust investigation into bid rigging and fraud at public real estate foreclosure auctions in Northern California.

According to the court filing, Gonzales conspired with others not to bid against one another, and instead to designate a winning bidder to obtain selected properties at public real estate foreclosure auctions. The selected properties were then awarded to the conspirators who submitted the highest bids in the second, private auctions. Gonzales also fraudulently acquired title to selected properties sold at public auctions, made and received payoffs, and diverted money to co-conspirators that would have gone to mortgage holders and others by holding second, private auctions open only to members of the conspiracy, it was charged.

According to the Justice Department, the primary purpose of the conspiracies was to suppress and restrain competition and to conceal payoffs in order to obtain selected real estate at non-competitive prices. The conspirators paid and received money that otherwise would have gone to pay off the mortgage and other holders of debt secured by the properties, and, in some cases, the defaulting homeowner.

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