A federal grand jury in San Francisco has returned a nine-count indictment against five real estate investors for their role in bid rigging and fraud at real estate foreclosure auctions in the east bay area of California, according to a release from the FBI.
The indictment charges northern California real estate investors John Michael Galloway, Nicholas Diaz, Glenn Guillory, Thomas Joyce and Charles Rock with participating in a conspiracy to rig bids and a scheme to defraud mortgage holders and others.
Bid rigging on foreclosure auctions
The indictment alleges the defendants agreed not to compete at public foreclosure auctions in Contra Costa County, California, and diverted money to themselves and others that should have gone to mortgage holders and other beneficiaries.
The indictment alleges that from as early as June 2008 through January 2011, the defendants conspired to not compete at public foreclosure auctions in Contra Costa County and then gave each other payouts for refraining from bidding on certain properties.
They held second, private auctions known as “rounds,” and concealed those rounds and payoffs, defrauding mortgage holders and other beneficiaries, the indictment alleges.
Each violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. Each count of mail fraud carries a maximum sentence of 20 years in prison and a $1 million fine. The government can also seek to forfeit the proceeds earned from participating in the mail fraud schemes. 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, according to the release.
To date, 50 individuals have pleaded guilty or agreed to plead guilty to criminal charges as a result of the department’s ongoing antitrust investigations into bid rigging and fraud at public foreclosure auctions in Northern California, according to the release. In addition, 21 real estate investors have been charged in five multi-count indictments for their roles in bid rigging and fraud schemes at foreclosure auctions in Alameda, Contra Costa and San Francisco counties.
“The Antitrust Division will continue to cooperate with its law enforcement partners to bring to justice those who undermine the competitive market for foreclosed properties,” Brent Snyder, Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program, said in the release. “Public auctions are meant for the public, not for an elite group conspiring together for their own profit.”
“These charges demonstrate our continued commitment to investigate and prosecute individuals and organizations responsible for the corruption of the public foreclosure auction process,” David J. Johnson, FBI Special Agent in Charge of the San Francisco Field Office, said in the release. “The FBI is committed to work these important cases and remains unwavering in our dedication to bring the members of these illegal conspiracies to justice.”
These charges are the latest filed by the department in its ongoing investigation into bid rigging and fraud at public real estate foreclosure auctions in San Francisco, San Mateo, Contra Costa and Alameda counties, California. These investigations are being conducted by the Antitrust Division’s San Francisco Office and the FBI’s San Francisco Office. Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Office at 415-934-5300, or call the FBI tip line at 415-553-7400.
Read the Contra Costa Times story here.
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