Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Obstruction of Justice Charge Added in U.S. Action Against California Real Estate Investors, (May 10, 2013)

By Jeffrey May, J.D.

A real estate investor charged in 2011 with conspiring to rig bids and commit mail fraud while purchasing properties at public real estate foreclosure auctions in California's San Joaquin County has now been charged with obstructing the government's investigation. A federal grand jury in Sacramento returned a superseding indictment on May 8, adding a charge against Andrew B. Katakis (U.S. v. Katakis, Case 2:11-cr-00511-WBS).

In December 2011, four real estate investors and an auctioneer were charged with participating in conspiracies to rig bids and commit mail fraud at the San Joaquin County public real estate foreclosure auctions. The government alleged that the conspiracy lasted from approximately September 2008 until October 2009. The indictment also charged the auctioneer with aiding and abetting the conspirators. The indictment named Katakis, as well as real estate investors Wiley C. Chandler, Donald M. Parker, and Anthony B. Joachim, and auctioneer W. Theodore Longley. On February 24, 2012, Chandler pleaded guilty to the charges. As a result of Chandler's guilty plea, he is not charged in the superseding indictment.

The added charge alleges that, after Katakis received a letter notifying him that a federal grand jury had subpoenaed his bank account, he deleted and caused others to delete electronic records and documents related to the conspiracies. The superseding indictment alleges that Katakis also installed and caused others to install and use a software program that overwrote deleted electronic records and documents so that they could not be viewed or recovered. The newly added obstruction of justice charge against Katakis carries a maximum sentence of 20 years and a $250,000 fine, according to the Department of Justice. The original charges against the other remaining defendants are unchanged.

"Obstruction of a grand jury investigation is a crime the Antitrust Division takes seriously," said Bill Baer, Assistant Attorney General in charge of the Department of Justice Antitrust Division. "We will prosecute those who subvert the competitive process, as well as those who attempt to conceal their illegal actions by destroying evidence."

"This superseding indictment includes allegations that, in addition to the charges previously alleged, this defendant obstructed justice," said Benjamin B. Wagner, U.S. Attorney for the Eastern District of California. "The new charge arises out of a long-running investigation that has already resulted in guilty pleas by numerous other defendants who participated in the scheme charged in this case."

In announcing the superseding indictment, the Justice Department noted that 10 individuals have pleaded guilty in the federal district court in Sacramento in connection with the investigation.

This is the first obstruction of justice charge in connection with the Justice Department's recent investigations into bidding practices at public auctions. In addition to investigations into the San Joaquin County public real estate foreclosure auctions, the Justice Department has brought enforcement actions challenging bidding practices at public real estate foreclosure auctions in California's San Francisco, San Mateo, Contra Costa, and Alameda counties and in southern Alabama, as well as municipal tax lien auctions in New Jersey.

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