Foreclosure Bid Rigging Investigations Net 37 Convictions

Some distressed homeowners in northernrnCalifornia may have suffered a double whammy when their homes were foreclosedrnthe Department of Justice said as they announced the guilty plea of a localrninvestor in a foreclosure bid rigging scheme. rnKuo Hsuan “Chuck” Chang is the 37^th person to plead or bernfound guilty in DOL’s ongoing antitrust investigations involving foreclosurernauctions in the area but it was unclear from the announcement whether arnrelationship existed among all of the guilty parties. </p

Chang was charged with conspiring withrnothers to designate a winning bidder to obtain foreclosed properties at auctionrnin San Francisco County while others withheld their bids.  He was also charged with conspiring to usernthe mail to fraudulently acquire title to selected properties, to make andrnreceive payoffs, and to divert co-conspirators’ money that would have otherwiserngone to mortgage holders and possibly to owners.  </p

Thernconspiracies allegedly began as early as October 2009 and continued until thernfollowing November. Felony charges werernbrought against Chang on October 9, 2013.</p

As described in the courtrndocument, the primary purpose of the conspiracies was to suppress and restrainrncompetition and to conceal payoffs in order to obtain selected real estaternoffered at county public foreclosure auctions at non-competitive prices. rnWhen real estate properties are sold at these auctions the proceeds are used tornpay off the mortgage and other debt attached to the property, with remainingrnproceeds, if any, paid to the homeowner.  Accordingrnto court documents, these conspirators paid and received money that otherwisernwould have gone to pay off the mortgage and other holders of debt secured byrnthe properties, and, in some cases, the defaulting homeowner. </p

“The Antitrust Division willrncontinue to vigorously prosecute anticompetitive schemes that compromise localrnmarkets and cause financial harm to consumers,” said Bill Baer, AssistantrnAttorney General in charge of the Department of Justice’s AntitrustrnDivision.  “Collusion at foreclosure auctions harmed both lenders andrndistressed homeowners in an already struggling real estate market, and thernconspirators must be held accountable.”</p

A violation of thernSherman (Anti-Trust) Act carries a maximum penalty of 10 years in prison and arn$1 million fine for individuals and this maximum may be increased to twice therngain derived from the crime or twice the loss suffered by the victims if eitherrnamount is greater than $1 million. A count of conspiracy to commit mail fraudrncarries a maximum sentence of 30 years in prison and a $1 million fine. </p

Other DOJ investigationsrninto bid rigging and fraud have been initiated in San Mateo, Alameda and ContrarnCosta counties in addition to San Francisco. rn

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