Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Two real estate investors agree to plead guilty to bid rigging at California foreclosure auctions, (Dec 18, 2013)
By Linda O’Brien, J.D., LL.M.
Two real estate investors, Florence Fung and Michael Navone, have agreed to plead guilty for their roles in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Northern California, the Department of Justice announced on December 17. The charges were filed in the federal district court in San Francisco (U.S. v. Fung, Criminal No. CR13-805; U.S. v. Navone, Criminal No. CR13-804).
Fung and Navone are the 39th and 40th individuals to plead guilty or agree to plead guilty as a result of the Justice Department’s ongoing antitrust investigations into bid rigging and fraud at public real estate foreclosure auctions in Northern California.
According to court documents, Fung and Navone conspired with other investors, between February 2009 and January 2011, not to bid against one another. Instead a winner bidder was designated to obtain selected properties at public real estate foreclosure auctions in San Mateo County. Fung and Navone were also charged with conspiring to use the mail to carry out schemes to fraudulently acquire title to selected properties sold at public auctions, to make and receive payoffs, and to divert money to co-conspirators that would have gone to mortgage holders. Navone was charged with participating in similar conspiracies in San Francisco County between October 2009 and January 2011. The charges are the latest by the Justice Department in its ongoing investigation into bid rigging and fraud at public real estate foreclosure auctions in San Francisco, San Mateo, Conta Costa, and Alameda counties.
The primary purpose of the conspiracies was to suppress and restrain competition, and to conceal payoffs in order to obtain selected real estate from San Mateo and San Francisco county public foreclosure auctions at non-competitive prices. Generally, when 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.
“Instead of competing at real estate foreclosures auctions, the conspirators agreed not to bid against one another and determined among themselves who would submit the winning bid, stifling honest and fair competition,” Bill Baer, Assistant Attorney General in charge of the Department of Justice Antitrust Division, said in announcing the plea agreements. “The Antitrust Division and its partners at the FBI continue to remain committed to holding accountable investors who attempt to subvert the competitiveness of the bidding process.”
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