Real Estate Investors Admit to Bid-Rigging at Foreclosure Auctions

by San Antonio Attorney

Some real estate investors make lots of money from the housing market crash. Banks have foreclosed on around 150,000 homes in the Bay Area from 2007 to 2012, according to real estate tracking company Property Radar.

Around 25,000 of those properties were bought at auctions across the Bay area, bringing in bidders with lots of cash. Records show that about $7 billion in foreclosed property have been sold within the past 6 years. In 2011, the FBI investigations revealed that there were illegal purchases in those transactions.

Currently, 46 real estate investors have admitted to rigging foreclosure auctions in San Francisco, Alameda, San Mateo and Contra Costa counties. Those investors put in over $200 million on the properties and as a group profited approximately $34 million from private auctions organized just for members within their circle. It is unknown how many properties they purchased because they were under the names of clients.

One frequent bidder described investors who mastered a system of purchasing houses at public auction. He said that purchasing foreclosed homes continues to be a risky business with little oversight of the process. He also said that newcomers were discouraged from putting in a bid through various tactics of bid riggers.

The FBI agents told the frequent bidder that they knew about the bid rigging and that it was an open secret.

Bid rigging violates the Sherman Antitrust Act, which carries a penalty of up to 10 years imprisonment and a $1 million fine.

David J. Johnson, a San Francisco FBI special agent, said any deal made by bidders to control competition at public auctions is a violation of federal antitrust laws.

The FBI said that the investigation is ongoing but did not make any further comments.

Those who have been charged in the Bay Area have pleaded guilty and are waiting for sentencing.

Leave a Comment

Previous post:

Next post: