Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Real estate investor pleads guilty to bid rigging at Georgia county foreclosure auctions, (Feb 21, 2014)

By Linda O’Brien, J.D., LL.M.

A Georgia real estate investor, Amy James, pleaded guilty for her role in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Georgia, the Department of Justice (DOJ) announced yesterday. Felony charges were filed on Dec. 19, 2013, in the U.S. District Court for the Northern District of Georgia in Atlanta (U.S. v. James, Criminal No. 1:13-cr-506).

According to court documents, from as early as Dec. 6, 2005 until at least Jan. 23, 2009, James conspired with other investors not to bid against one another, but instead to designate a winning bidder to obtain selected properties at public real estate foreclosure auctions in DeKalb County, Georgia. James also was charged with a conspiracy to commit mail fraud by fraudulently acquiring title to selected DeKalb County properties sold at public auctions and making and receiving payoffs and diverting 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. The DOJ said that the selected properties were then awarded to the conspirators who submitted the highest bids in the second, private auctions.

The primary purpose of the conspiracies was to suppress and restrain competition and to conceal payoffs in order to obtain real estate offered at DeKalb County public foreclosure auctions at non-competitive prices, according to the DOJ. 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, 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.

A violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. 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 victims if either amount is greater than $1 million. A count of conspiracy to commit mail fraud carries a maximum sentence of 20 years in prison and a $250,000 fine for individuals. The government can also seek to forfeit the proceeds earned from participating in the conspiracy to commit mail fraud.

“Today’s guilty plea is the third in the Antitrust Division’s ongoing investigation into anticompetitive behavior at real estate foreclosure auctions in the state of Georgia,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The Antitrust Division remains committed to holding accountable individuals who conspire to defraud distressed homeowners and lenders in Georgia and elsewhere.”

The plea reflects the FBI’s commitment toward enforcement of federal antitrust laws that are designed to provide a level playing field among businesses and individuals as they engage in competition for commerce, according to Ricky Maxwell, Acting Special Agent in Charge of the FBI’s Atlanta Field Office. “The FBI will continue to work with its various law enforcement partners regarding these enforcement matters and asks that the public contact their nearest FBI field office regarding such unfair and illegal business practices.”

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