Antitrust Law Daily Wrap Up, TOP STORY: Real estate investors plead guilty to bid rigging, bank fraud, (Jul 1, 2016)

By Jeffrey May, J.D.

Three Georgia real estate investors charged in early June with conspiring to rig bids and commit bank fraud have entered guilty pleas. Sentencing is set for October 20. The charges against Jeffrey Wayne Brock, David Wallace Doughty, and Stanley Ralph Sullivan are the result of an ongoing Department of Justice Antitrust Division investigation of Georgia real estate foreclosure auctions (U.S. v. Brock, Case No. 1:16-cr-00195-MHC).

All three individuals were named in the same two-count information filed in the federal district court in Atlanta on June 7. The defendants have pleaded guilty to engaging in a conspiracy to rig bids at foreclosure auctions in Georgia’s Cobb County. The alleged conspiracy lasted from around June 2007 through January 2012. The government also charged the individuals with conspiring to commit bank fraud. Among other things, in carrying out the conspiracy, the individuals suppressed purchase prices to be paid to financial institutions and made false representations to agents of the financial institutions.

According to the government, Brock, Doughty, Sullivan and their co-conspirators agreed not to compete for the purchase of selected foreclosed homes so that they could win the auctions for those homes with artificially low bids. The winning bidders purportedly made payoffs to conspirators who had refrained from bidding against them. As a result, conspirators profited from money that otherwise would have gone to mortgage holders and other secured debt holders, and in some cases, to the owners of foreclosed homes, the Justice Department contended.

"These defendants conspired to corrupt foreclosure auctions that should have benefited lenders and homeowners," said Principal Deputy Assistant Attorney General Renata Hesse, head of the Justice Department’s Antitrust Division, in announcing the pleas. "The Antitrust Division will continue to work with our colleagues at the FBI to pursue those who took advantage of disruption caused by the financial crisis to line their own pockets."

Attorneys: Andrew J. Ewalt for U.S. Department of Justice. Donald F. Samuel (Garland, Samuel & Loeb) for Jeffrey Wayne Brock.

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