Antitrust Law Daily Wrap Up, TOP STORY: Five California real estate investors indicted in bid rigging, mail fraud investigation, (Oct 22, 2014)

By Jeffrey May, J.D.

New charges were filed today in the Justice Department's ongoing investigation into bid rigging and fraud at public real estate foreclosure auctions in Northern California. Late yesterday, a federal grand jury in San Francisco returned an eight-count indictment against five real estate investors for their alleged role in the bid rigging and fraud schemes. All five were charged with participating in schemes impacting foreclosure auctions in California's San Mateo County, and three of the five allegedly engaged in bid rigging and fraud related to San Francisco County auctions (U.S. v. Giraudo, Criminal No. 3:14-cr-00534-WHO).

According to the indictment, real estate investors Joseph Giraudo, Raymond Grinsell, Kevin Cullinane, James Appenrodt, and Abraham Farag conspired to rig bids and schemed to defraud mortgage holders and others. The alleged conduct took place between 2008 and January 2011, according to the Justice Department. The defendants allegedly agreed to stop bidding or to refrain from bidding for properties at public foreclosure auctions in order to obtain properties at non-competitive prices. The defendants also were charged with participating in the mail fraud schemes.

Since 2011, 47 individuals have agreed to plead or have pleaded guilty as a result of the antitrust probe of public real estate foreclosure auctions in Northern California. Real estate investor Sebastian Zepernick was the latest target to agree to plead guilty in the investigation. On October 3, Zepernick was charged with conspiring to designate winning bidders for properties at public real estate foreclosure auctions in California's Contra Costa County, as well as conspiring to use the mail to carry out a scheme to fraudulently acquire title to selected Contra Costa County properties. Similar Justice Department investigations have uncovered bid rigging conspiracies at foreclosure auctions in nearby San Joaquin County, as well as in other parts of the country, including Alabama and Georgia.

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