TWO PLEAD GUILTY TO RIGGING BIDS AT PUBLIC HOME FORECLOSURES IN GEORGIA

FROM:  U.S. JUSTICE DEPARTMENT 

Monday, January 4, 2016

Two Georgia Real Estate Investors Plead Guilty to Rigging Bids at Public Home Foreclosure Auctions

The 11th and 12th Defendants Charged in Ongoing Investigation

Two Georgia real estate investors pleaded guilty today for their roles in bid-rigging and mail fraud conspiracies at public real estate foreclosure auctions in Georgia.  Paul Chen and Ira Eisenberg each admitted that they agreed not to bid against others at certain public real estate foreclosure auctions and that they conspired to defraud mortgage holders and homeowners using the mail system.

“These individuals unlawfully rigged home foreclosure auctions, and then used payoffs and private side auctions to divide among themselves money that should have gone to mortgage holders and homeowners,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division.  “Together with our FBI colleagues, the division will bring to justice unscrupulous investors who scheme to rob unsuspecting mortgage holders and homeowners.”

“Incidents of bid rigging at public real estate auctions continue to be an issue in Georgia and elsewhere in the United States, and the FBI would like to remind the public that such matters are violations of federal law,” said Special Agent in Charge J. Britt Johnson of the FBI’s Atlanta Field Office.  “The FBI will continue to work with the U.S. Department of Justice’s Antitrust Division in identifying, investigating and prosecuting those individuals engaged in such activities.”

Chen admitted to participating in the conspiracy in Fulton County, Georgia, from as early as February 2009 until at least March 2010, and Eisenberg admitted to participating from as early as August 2009 until at least February 2011.  Additionally, Chen admitted to participating in the DeKalb County, Georgia, conspiracy from as early as November 2009 until at least September 2011.  According to documents filed with the court, the purpose of the conspiracies was to suppress and restrain competition and divert money to the conspirators that otherwise would have gone to pay off the mortgage and other holders of debt secured by the properties and, in some cases, the defaulting homeowner.

These charges have been filed as a result of the ongoing investigation being conducted by the Antitrust Division’s Washington Criminal II Section, the FBI’s Atlanta Division, and the U.S. Attorney’s Office of the Northern District of Georgia, in connection with the President’s Financial Fraud Enforcement Task Force.  The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  With more than 20 federal agencies, 94 U.S. Attorneys’ Offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud.  Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations.  Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants.

COMPANY TO PAY $13.5 MILLION FINE FOR PRICE FIXING BALL BEARINGS

FROM:  U.S. JUSTICE DEPARTMENT 

CRIMINAL FINE FOR PRICE FIXING ON SMALL SIZED BALL BEARINGS

WASHINGTON — Minebea Co. Ltd., a small sized bearings manufacturer based in Nagano, Japan, has agreed to plead guilty and to pay a $13.5 million criminal fine for its role in a conspiracy to fix prices for small sized ball bearings sold to customers in the United States and elsewhere, the Department of Justice announced today.

According to a one-count felony charge filed today in U.S. District Court for the Southern District of Ohio in Cincinnati, Minebea conspired to fix the prices of small sized ball bearings in the United States and elsewhere.  In addition to the criminal fine, Minebea has agreed to cooperate in the department’s ongoing investigation.  The plea agreement is subject to court approval.

According to the charge, Minebea and its co-conspirator discussed and agreed upon prices to be submitted to small sized ball bearings customers.  Minebea’s participation in the conspiracy lasted from at least as early as early-to-mid 2008 and continued until at least October 2011.

“Because of the unlawful price-fixing by the defendant and its co-conspirators, American businesses paid more for small-sized bearings than they otherwise would,” said Bill Baer, Assistant Attorney General of the Department of Justice’s Antitrust Division.  “Working with the Federal Bureau of Investigation and our other law enforcement partners, the Antitrust Division will continue our efforts to ensure American businesses and consumers benefit from competitive markets.”

“Any agreement that restricts price competition violates the law,” said U.S. Attorney Carter Stewart of Southern District of Ohio.  “We will continue to work to protect consumers’ right to free and open competition.”

Bearings are used in industry in numerous products to reduce friction and help parts roll smoothly past one another; they “bear” the load.  Small sized ball bearings are those ball bearings whose outside diameter is 26 millimeters or less.

Minebea is charged with price fixing in violation of the Sherman Act, which carries a maximum penalty of a $100 million criminal fine for corporations.  The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

The charge today is the result of an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the bearings industry, which is being conducted by the Antitrust Division’s Chicago Office and the FBI’s Cincinnati Field Office.

FORMER MARINE HOSE EXECUTIVE PLEADS GUILTY FOR ROLE IN WORLDWIDE BID-RIGGING CONSPIRACY

FROM:  U.S. JUSTICE DEPARTMENT 

FORMER MARINE HOSE EXECUTIVE WHO WAS EXTRADITED TO UNITED

STATES PLEADS GUILTY FOR PARTICIPATING IN WORLDWIDE BID-RIGGING CONSPIRACY

Court Sentences Executive to Serve Two Years in Prison

WASHINGTON — A former executive of a rubber hose manufacturer, who was extradited from Germany in early April 2014, today pleaded guilty and was sentenced to serve two years in prison for participating in a conspiracy to rig bids, fix prices and allocate market shares of marine hose sold in the United States and elsewhere, the Department of Justice announced.

Romano Pisciotti, an Italian national and a former manager of Parker ITR Srl’s Oil & Gas Business Unit, pleaded guilty in the U.S. District Court for the Southern District of Florida in Ft. Lauderdale, to a one-count felony indictment that was filed under seal on Aug. 26, 2010, and unsealed on Aug. 5, 2013.

Pisciotti was extradited from Germany on April 3, 2014, in the first successfully litigated extradition on an antitrust charge.  Pisciotti was arrested in Germany on June 17, 2013, and made his initial appearance in U.S. District court on April 4, 2014.  Pisciotti will serve a total of two years in prison with credit for the nine months and 16 days he was held in the custody of the German government pending his extradition.  He has also agreed to pay a $50,000 criminal fine.

“Today’s guilty plea demonstrates the Antitrust Division’s ability to bring to justice those who violate antitrust laws, even when they attempt to avoid prosecution by remaining in foreign jurisdictions,” said Assistant Attorney General Bill Baer in charge of the Department of Justice’s Antitrust Division.  “The Antitrust Division and its law enforcement partners will continue to protect consumers from cartels that affect the domestic and international economy.”

Marine hose is a flexible rubber hose used to transfer oil between tankers and storage facilities.  During the conspiracy, the cartel affected prices for hundreds of millions of dollars in sales of marine hose and related products sold worldwide.

According to the indictment, Pisciotti carried out the conspiracy by agreeing during meetings, conversations and communications to allocate shares of the marine hose market among the conspirators; use a price list for marine hose in order to implement the conspiracy; and not compete for customers with other marine hose sellers either by not submitting prices or bids or by submitting intentionally high prices or bids, all in accordance with the agreements reached among the conspiring companies.  As part of the conspiracy, Pisciotti and his conspirators provided information received from customers in the United States and elsewhere about upcoming marine hose jobs to another co-conspirator who served as a coordinator of the conspiracy.  The coordinator acted as a clearinghouse for bidding information that was shared among the conspirators, and was paid by the manufacturers for coordinating the conspiracy.  Pisciotti recruited at least two individuals from other marine hose firms to participate in the conspiracy.  The department said the conspiracy began at least as early as 1999 and continued until at least May 2007.  Pisciotti was charged with participating in the conspiracy from at least as early as 1999 until at least November 2006.

As a result of the department’s ongoing marine hose investigation, five companies – Parker ITR; Bridgestone Corp. of Japan; Manuli SPa of Italy’s Florida subsidiary; Trelleborg of France; and Dunlop Marine and Oil Ltd., of the United Kingdom – and eight other individuals have pleaded guilty and have been sentenced to serve prison terms ranging from 12 months and one day to 30 months.  An additional individual was sentenced to serve six months home confinement.  Indicted fugitive Uwe Bangert, a German national formerly associated with Dunlop Marine and Oil Ltd., remains at large.

The investigation is being conducted by the Antitrust Division’s Washington Criminal I Section, the Defense Criminal Investigative Service (DCIS) of the Department of Defense’s Office of Inspector General, the U.S. Navy Criminal Investigative Service and the FBI.  The U.S. Marshals Service and other law enforcement agencies from multiple foreign jurisdictions are also investigating or assisting in the ongoing matter. The Criminal Division’s Office of International Affairs and the U.S. Attorney’s Office for the Southern District of Florida provided assistance.

CO-OWNER PIPES SUPPLY COMPANY PLEADS GUILTY TO MAKING FALSE STATEMENT TO EPA

FROM:  U.S. JUSTICE DEPARTMENT

CO-OWNER OF NEW JERSEY INDUSTRIAL PIPES SUPPLY COMPANY PLEADS
GUILTY TO MAKING FALSE STATEMENT IN CONNECTION WITH SUPERFUND INVESTIGATION

WASHINGTON — A co-owner of a Middlesex, N.J., industrial pipes, valves and fittings supply company pleaded guilty today to one count of making a false statement, the Department of Justice announced.

Victor Boski pleaded guilty in the U.S. District Court of New Jersey to willfully making a materially false and fictitious statement to the U.S. Environmental Protection Agency (EPA) at a debarment proceeding. Previously, Boski and his company, National Industrial Supply LLC (NIS), had pleaded guilty on March 4, 2009, to participating in a kickback and fraud conspiracy to defraud the EPA at the Federal Creosote Superfund site located in Manville, N.J., and to defraud Tierra Solutions Inc., a general contractor based in The Woodlands, Texas, at the Diamond Alkali Superfund site in Newark, N.J., from approximately December 2000 to approximately September 2004. As outlined in the 2009 plea agreement, Boski provided $55,000 in kickbacks to two employees of the prime contractor responsible for awarding contracts at the two Superfund sites in exchange for the award of sub-contracts to NIS. These kickbacks included luxury vacations and payments to shell companies held by the two employees. Today’s guilty plea arises from false statements Boski made to the EPA in regard to his and NIS’s debarment hearing that resulted from the 2009 guilty pleas.

According to court documents, Boski appeared before the EPA on or about Nov. 30, 2011, on behalf of NIS to review his and NIS’s future eligibility to contract with the United States. During the course of the hearing, Boski falsely stated that he and NIS had paid kickbacks in the form of sporting event tickets and that the $55,000 in kickbacks he and NIS pleaded guilty to paying was an artificial number.

“When individuals plead guilty to participating in fraud and kickback schemes, it is crucial that that they do not then lie to government procurement officials about their conduct,” said Bill Baer, Assistant Attorney General in charge of the Justice Department’s Antitrust Division. “The division will vigorously prosecute individuals who make false statements regarding the crimes they have committed.”

Including Boski, nine individuals and three companies have pleaded guilty or been convicted of charges arising out of this investigation. More than $6 million in criminal fines and restitution have been imposed and six of the individuals have been sentenced to serve prison sentences ranging from five months to 14 years. One individual was sentenced to six months home confinement and the remaining two were sentenced to pay criminal fines and restitution. An additional individual, John A. Bennett, a Canadian citizen, was also charged on Aug. 31, 2009, and is facing extradition to the United States. Boski is scheduled to be sentenced on July 7, 2014, before Judge Susan D. Wigenton.

Boski faces a maximum penalty of five years in prison and a $250,000 fine. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims if either of those amounts is greater than the statutory maximum fine.

GEORGIA REAL ESTATE INVESTOR PLEADS GUILTY TO BID RIGGING

FROM:  U.S. JUSTICE DEPARTMENT 
GEORGIA REAL ESTATE INVESTOR PLEADS GUILTY TO BID RIGGING AND FRAUD AT PUBLIC REAL ESTATE FORECLOSURE AUCTIONS

WASHINGTON — A Georgia real estate investor pleaded guilty today for her role in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Georgia, the Department of Justice announced.

Felony charges were filed on Dec. 19, 2013, in the U.S. District Court for the Northern District of Georgia in Atlanta, against Amy James. According to court documents, from as early as Dec. 6, 2005, until at least Jan. 23, 2009, James conspired with others not to bid against one another, but instead to designate a winning bidder to obtain selected properties at public real estate foreclosure auctions in DeKalb County, Ga.  James was also charged with a conspiracy to commit mail fraud by fraudulently acquiring title to selected DeKalb County properties sold at public auctions and making and receiving payoffs and diverting money to co-conspirators that would have gone to mortgage holders and others by holding second, private auctions open only to members of the conspiracy.  The department said that the selected properties were then awarded to the conspirators who submitted the highest bids in the second, private auctions.

“Today’s guilty plea is the third in the Antitrust Division’s ongoing investigation into anticompetitive behavior at real estate foreclosure auctions in the state of Georgia,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.  “The Antitrust Division remains committed to holding accountable individuals who conspire to defraud distressed homeowners and lenders in Georgia and elsewhere.”

The department said that the primary purpose of the conspiracies was to suppress and restrain competition and to conceal payoffs in order to obtain real estate offered at DeKalb County public foreclosure auctions at non-competitive prices.  When real estate properties are sold at these auctions, the proceeds are used to pay off the mortgage and other debt attached to the property, with remaining proceeds, if any, paid to the homeowner.  According to court documents, the conspirators paid and received money that otherwise would have gone to pay off the mortgage and other holders of debt secured by the properties, and, in some cases, the defaulting homeowner.

 “Today's guilty plea reflects the FBI's commitment toward enforcement of federal antitrust laws that are designed to provide a level playing field among businesses and individuals as they engage in competition for commerce,” said Ricky Maxwell, Acting Special Agent in Charge of the FBI’s Atlanta Field Office.  “The FBI will continue to work with its various law enforcement partners regarding these enforcement matters and asks that the public contact their nearest FBI field office regarding such unfair and illegal business practices.”

A violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine for a Sherman Act charge may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime if either amount is greater than the statutory maximum fine.  A count of conspiracy to commit mail fraud carries a maximum penalty of 20 years in prison and a fine of $250,000 for individuals.  The fine may be increased to twice the gross gain the conspirators derived from the crime or twice the gross loss caused to the victims of the crime.

The investigation is being conducted by Antitrust Division attorneys in Atlanta and the FBI’s Atlanta Division, with the assistance of the Atlanta Field Office of the Housing and Urban Development Office of Inspector General and the U.S. Attorney’s Office for the Northern District of Georgia.

Today’s charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud.  Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations.  Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants.

2 INVESTORS PLEAD GUILTY IN MUNICIPAL TAX LIEN AUCTION BID-RIGGING CASE

FROM:  U.S. JUSTICE DEPARTMENT 
TWO NEW JERSEY INVESTORS PLEAD GUILTY FOR THEIR ROLES IN BID–RIGGING SCHEMES AT MUNICIPAL TAX LIEN AUCTIONS
Investigation Has Yielded 14 Guilty Pleas

WASHINGTON —Two financial investors who purchased municipal tax liens pleaded guilty today for their roles in a conspiracy to rig bids at auctions conducted by New Jersey municipalities for the sale of those tax liens, the Department of Justice announced.

A felony charge was filed today in U.S. District Court for the District of New Jersey in Newark, against Robert U. Del Vecchio Sr., of Hawthorne, N.J. According to the charge, from in or about 2000 until approximately December 2008, Del Vecchio Sr. participated in a conspiracy to rig bids at auctions for the sale of municipal tax liens in New Jersey by agreeing to allocate among certain bidders which liens each would bid on.  Additionally, a felony charge was filed today in the U.S. District Court for the District of New Jersey in Newark, against Michael Mastellone, of Cedar Knolls, N.J. for participating in a similar conspiracy from in or about 2000 until approximately February 2009.  The department said that Del Vecchio Sr. and Mastellone proceeded to submit bids in accordance with the agreements and purchased tax liens at collusive and non-competitive interest rates.

“By conspiring to rig the bids of municipal tax liens, the conspirators profited at the expense of those already struggling financially,” said Scott D. Hammond, Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program.  “Protecting Americans from these types of bid-rigging schemes remains a high priority for the division.”

The department said the primary purpose of the conspiracy was to suppress and restrain competition in order to obtain selected municipal tax liens offered at public auctions at non-competitive interest rates. When the owner of real property fails to pay taxes on that property, the municipality in which the property is located may attach a lien for the amount of the unpaid taxes. If the taxes remain unpaid after a waiting period, the lien may be sold at auction. State law requires that investors bid on the interest rate delinquent property owners will pay upon redemption. By law, the bid opens at 18 percent interest and, through a competitive bidding process, can be driven down to zero percent.  If a lien remains unpaid after a certain period of time, the investor who purchased the lien may begin foreclosure proceedings against the property to which the lien is attached.

According to the court documents, Del Vecchio Sr. and Mastellone were involved in the conspiracy with others not to bid against one another at municipal tax lien auctions in New Jersey. Since the conspiracy permitted the conspirators to purchase tax liens with limited competition, each conspirator was able to obtain liens which earned a higher interest rate. Property owners were therefore made to pay higher interest on their tax debts than they would have paid had their liens been purchased in open and honest competition, the department said.

A violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine for a Sherman Act violation 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 the $1 million statutory maximum.

Today’s pleas are the 13th and 14th guilty pleas resulting from an ongoing investigation into bid rigging or fraud related to municipal tax lien auctions. Nine individuals – Isadore H. May, Richard J. Pisciotta Jr., William A. Collins, Robert W. Stein, David M. Farber, Robert E. Rothman, Stephen E. Hruby, David Butler and Norman T. Remick – and three companies – DSBD LLC, Crusader Servicing Corp. and Mercer S.M.E. Inc. – have previously pleaded guilty as part of this investigation.

Today’s charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.StopFraud.gov.

This ongoing investigation is being conducted by the Antitrust Division’s New York Office and the FBI’s Atlantic City, N.J., office.

GUILTY PLEA ENTERED BY FORMER REAL ESTATE INVESTOR FOR ROLE IN FORECLOSURE AUCTION FRAUD

FROM:  U.S. JUSTICE DEPARTMENT

FORMER ALABAMA REAL ESTATE INVESTOR PLEADS GUILTY 
TO MAKING FALSE STATEMENT IN CONNECTION WITH REAL ESTATE FORECLOSURE AUCTION INVESTIGATION

WASHINGTON — A former investor in the Alabama real estate foreclosure auctions industry pleaded guilty today to one count of making false statements, the Department of Justice announced.

Ali Forouzan, of Mobile, Ala., pleaded guilty in the U.S. District Court for the Southern District of Alabama in Mobile to making materially false and fictitious statements to a Special Agent of the FBI and a Department of Justice Antitrust Division prosecutor.  The false statements were in regard to his knowledge of, and participation in, bid rigging and other fraudulent schemes in the Alabama real estate foreclosure auction industry.

According to the charge, in February 2012, Forouzan was interviewed, with counsel present, about the fraudulent schemes under investigation.  Forouzan was aware of the nature of the investigation and knew that it was material for the FBI and the Antitrust Division to obtain his full knowledge of such unlawful acts as bid-rigging agreements and other fraudulent schemes relating to real estate foreclosure auctions; unlawful payoffs that he and others made and received in furtherance of such schemes; and secret, second auctions in which Forouzan and others participated.  However, Forouzan willfully and knowingly provided false and fictitious information during his interview.

“The Antitrust Division views attempts to compromise the integrity of its investigations as a serious offense,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.  “Today’s filing should send a clear signal that the Antitrust Division is committed to prosecuting vigorously attempts to cover-up illegal, anticompetitive conduct.”

 “The success of this investigation exemplifies the FBI’s continued commitment to fight fraud in the real estate industry and serves to deter those who wish to illegally profit from fraud schemes,” said Stephen E. Richardson, FBI Special Agent in Charge of the Mobile Field Office.  Special Agent in Charge Richardson praised the perseverance of agents and prosecutors in this complex investigation.

Including Forouzan, to date, nine individuals and two companies have pleaded guilty as a result of the department’s ongoing investigation into the Alabama real estate foreclosure auction industry.

Forouzan faces a maximum penalty of five years in prison, three years of supervised release and a $250,000 fine.

The charge against the defendant arose from an ongoing investigation into bid rigging and other fraudulent schemes in the Alabama real estate foreclosure auctions industry.  Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should call 404-331-7116 or visit www.justice.gov/atr/contact/newcase.htm.

Today’s charges were brought in connection with the President’s Financial Fraud Enforcement Task Force.  The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  With more than 20 federal agencies, 94 U.S. Attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud.  Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations.  Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants.  For more information on the task force, please visit www.StopFraud.gov.

CALIFORNIA FORECLOSURE AUCTION BID RIGGER PLEADS GUILTY

FROM:  U.S. JUSTICE DEPARTMENT 
Investigations Have Yielded 36 Plea Agreements to Date

WASHINGTON — A Northern California real estate investor has agreed to plead guilty for his role in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Northern California, the Department of Justice announced.

Felony charges were filed today in the U.S. District Court for the Northern District of California in San Francisco against Daniel Rosenbledt of Hillsborough, Calif. Rosenbledt is the 36th individual to plead guilty or agree to plead guilty as a result of the department’s ongoing antitrust investigations into bid rigging and fraud at public real estate foreclosure auctions in Northern California.

According to court documents, Rosenbledt conspired with others not to bid against one another, but instead to designate a winning bidder to obtain selected properties at public real estate foreclosure auctions in San Mateo and San Francisco counties, Calif. Rosenbledt was also charged with conspiring to use the mail to carry out schemes to fraudulently acquire title to selected properties sold at public auctions, to make and receive payoffs, and to divert to co-conspirators money that would have otherwise gone to mortgage holders and others.

Court papers stated Rosenbledt conspired with others to rig bids and commit mail fraud at public real estate foreclosure auctions in San Mateo County beginning as early as April 2008 and continuing until about January 2011. Rosenbledt was also charged with similar conduct in San Francisco County beginning as early as November 2009 and continuing until about January 2011.

“The Antitrust Division remains committed to vigorously pursuing conspirators who collude at foreclosure auctions at the expense of lenders and distressed homeowners,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “A competitive process benefits those homeowners who are looking for the best possible outcome during a difficult situation.”

The filing stated that the primary purpose of the conspiracies was to suppress and restrain competition and to conceal payoffs in order to obtain selected real estate offered at San Mateo and San Francisco County public foreclosure auctions at non-competitive prices. When real estate properties are sold at these auctions, the proceeds are used to pay off the mortgage and other debt attached to the property, with remaining proceeds, if any, paid to the homeowner. According to court documents, these conspirators paid and received money that otherwise would have gone to pay off the mortgage and other holders of debt secured by the properties, and, in some cases, the defaulting homeowner.

“For those who engage in illegal anticompetitive practices at foreclosure actions, we will hold you accountable for your actions and bring you to justice,” said David J. Johnson, FBI Special Agent in Charge of the San Francisco Field Office.  “The FBI and the Antitrust Division are committed to rooting out those who undermine the real estate market and take advantage of legitimate home buyers and sellers.”

A violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. 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. A count of conspiracy to commit mail fraud carries a maximum sentence of 30 years in prison and a $1 million fine. The government can also seek to forfeit the proceeds earned from participating in the conspiracy to commit mail fraud.

The charges today 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, Alameda and Contra Costa counties, Calif. 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 415-436-6660, visit www.justice.gov/atr/contact/newcase.htm or call the FBI tip line at 415-553-7400.

Today's charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants.

TWO ALABAMA REAL ESTATE INVESTORS SENTENCED IN PUBLIC FORECLOSURE BID-RIGGING CASE

FROM: U.S. DEPARTMENT OF JUSTICE

TWO ALABAMA REAL ESTATE INVESTORS AND THEIR COMPANY SENTENCED
FOR THEIR ROLES IN BID-RIGGING AND MAIL FRAUD CONSPIRACIES
INVOLVING REAL ESTATE PURCHASED AT PUBLIC FORECLOSURE AUCTIONS

WASHINGTON — Two Alabama real estate investors and their company were sentenced today in U.S. District Court for the Southern District of Alabama in Mobile, for their participation in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in southern Alabama, the Department of Justice announced.

Robert M. Brannon, of Laurel, Miss., and his son, Jason R. Brannon, of Mobile, Ala., were each sentenced to serve 20 months in prison for their participation in the conspiracies. The Brannons and their Mobile-based company, J&R Properties LLC, were ordered to pay $21,983 in restitution to the victims of the crime.

"Today’s sentences send a strong message that the Antitrust Division will continue to hold individuals and companies accountable for their anticompetitive conduct," said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. "Whether on a local, national or international scale, bid rigging and fraud subvert the competitive process and the division will remain vigilant in vigorously pursuing those who violate the antitrust laws for their own financial enrichment."

On Dec. 12, 2012, the Brannons and their company, pleaded guilty to an indictment originally returned on June 28, 2012, in the U.S. District Court for the Southern District of Alabama, charging each of them with one count of bid rigging and one count of conspiracy to commit mail fraud. According to court documents, the Brannons and their company conspired with others not to bid against one another at public real estate foreclosure auctions in southern Alabama. After a designated bidder bought a property at a public auction, which typically takes place at the county courthouse, the conspirators would generally hold a secret, second auction, at which each participant would bid the amount above the public auction price he or she was willing to pay. The highest bidder at the secret, second auction won the property.

The indictment also charged the Brannons and their company with conspiring to use the U.S. mail to carry out a fraudulent scheme to acquire title to rigged foreclosure properties sold at public auctions at artificially suppressed prices; to make payoffs to and to receive payoffs from co-conspirators; and to cause financial institutions, homeowners and others with a legal interest in rigged foreclosure properties to receive less than the competitive price for the properties. The indictment charged the Brannons and their company with participating in the bid-rigging and mail fraud conspiracies from as early as October 2004 until at least August 2007.

"The success of this investigation represents the FBI’s staunch commitment to target and investigate those who are willing to abuse and exploit illegal advantages during this legal process for personal gain at the expense of suffering citizens and businesses," said Stephen E. Richardson, Special Agent in Charge of the FBI’s Mobile Division.

A total of eight individuals and two companies have pleaded guilty in the U.S. District Court for the Southern District of Alabama, in connection with this investigation. The sentences announced today resulted from an ongoing investigation conducted by the Antitrust Division and the FBI’s Mobile Office, with the assistance of the U.S. Attorney’s Office for the Southern District of Alabama.

NEW JERSEY INVESTOR PLEADS GUILTY FOR ROLE IN BID-RIGGING

FROM: U.S. DEPARTMENT OF JUSTICE

Investigation Has Yielded 12 Guilty Pleas

WASHINGTON — A financial investor who purchased municipal tax liens pleaded guilty today for his role in a conspiracy to rig bids for the sale of tax liens auctioned by municipalities in New Jersey, the Department of Justice announced.

A felony charge was filed today in U.S. District Court for the District of New Jersey in Newark, against Norman T. Remick, of Barnegat, N.J. According to the charge, from in or about the beginning of 2007 until approximately February 2009, Remick participated in a conspiracy to rig bids at auctions for the sale of municipal tax liens in New Jersey by agreeing to allocate among certain bidders which liens each would bid on. The department said that Remick proceeded to submit bids in accordance with the agreements and purchased tax liens at collusive and non-competitive interest rates.

"The conspirators illegally met and engaged in anticompetitive discussions to allocate bids amongst themselves at tax lien auctions in New Jersey, depriving distressed homeowners of competitive interest rates at a time when they most needed them," said Scott D. Hammond, Deputy Assistant Attorney General for the Antitrust Division's criminal enforcement program. "Prosecuting these types of bid-rigging schemes remains a top priority for the division."

The department said that the primary purpose of the conspiracy was to suppress and restrain competition in order to obtain selected municipal tax liens offered at public auctions at non-competitive interest rates. When the owner of real property fails to pay taxes on that property, the municipality in which the property is located may attach a lien for the amount of the unpaid taxes. If the taxes remain unpaid after a waiting period, the lien may be sold at auction. State law requires that investors bid on the interest rate delinquent property owners will pay upon redemption. By law, the bid opens at 18 percent interest and, through a competitive bidding process, can be driven down to zero percent. If a lien remains unpaid after a certain period of time, the investor who purchased the lien may begin foreclosure proceedings against the property to which the lien is attached.

According to the court documents, Remick was involved in a conspiracy with others not to bid against one another at municipal tax lien auctions in New Jersey. Since the conspiracy permitted the conspirators to purchase tax liens with limited competition, each conspirator was able to obtain liens that earned a higher interest rate. Property owners were, therefore, made to pay higher interest on their tax debts than they would have paid had their liens been purchased through open and honest competition, the department said.

A violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine for a Sherman Act violation 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 the $1 million statutory maximum.

Today's plea is the 12th guilty plea resulting from an ongoing investigation into bid rigging or fraud related to municipal tax lien auctions. Eight individuals – Isadore H. May, Richard J. Pisciotta Jr., William A. Collins, Robert W. Stein, David M. Farber, Robert E. Rothman, Stephen E. Hruby and David Butler – and three companies – DSBD LLC, Crusader Servicing Corp. and Mercer S.M.E. Inc. – have previously pleaded guilty as part of this investigation.

Today's charge was brought in connection with the President's Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys' offices and state and local partners, it's the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants.

MESQUITE CHARCOAL DISTRIBUTOR PLEADS GUILTY IN BID-RIGGING CONSPIRACY

FROM:  U.S. DEPARTMENT OF JUSTICE ANTITURST DIVISION
WASHINGTON — The owner of a southern California-based mesquite charcoal distributor pleaded guilty for his role in a customer allocation and bid-rigging conspiracy for the sale of mesquite charcoal, the Department of Justice announced today.

According to a one-count felony charge filed on May 7, 2012, in the U.S. District Court in San Francisco, William W. Lord, the owner of Carpinteria, Calif. -based Chef's Choice Mesquite Charcoal, participated in a conspiracy with competitors to refrain from competing for each other's customers and to submit noncompetitive bids for the sale of mesquite charcoal. According to the plea agreement, Lord has agreed to cooperate with the department's ongoing investigation.

"Today's charge demonstrates the Antitrust Division's commitment to prosecute bid-rigging conspiracies that involve products used in the everyday lives of consumers and businesses' daily operations," said Acting Assistant Attorney General Joseph Wayland in charge of the Department of Justice's Antitrust Division.

Chef's Choice distributes and sells mesquite charcoal throughout the United States. Mesquite charcoal, which is typically used by restaurants and individuals to grill meat, fish and poultry, is primarily produced in Mexico and then sold to distributors in the United States for eventual resale to restaurants and consumers.

According to court documents, the charged conspiracy began as early as January 2000 and lasted until about September 2010. Lord and his competitors, a Los Angeles-area mesquite charcoal distributor and a San Francisco-area mesquite charcoal distributor, entered into an agreement to refrain from competing for the sale of mesquite charcoal to each other's customers. The purpose of this agreement was to ensure that Lord and his competitors would not have to reduce mesquite charcoal prices in the face of competition in order to retain their customers. Lord and his competitors carried out the conspiracy in various ways, including: refraining from submitting bids for the sale of mesquite charcoal to each other's customers; submitting intentionally noncompetitive bids to each other's customers; and communicating with each other regarding what price to bid and then submitting agreed-upon, noncompetitive bids to each other's customers.

Lord is charged with violating the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victim of the crime if either of those amounts is greater than the statutory maximum fine.

ALABAMA REAL ESTAE BID-RIGGER PLEADS GUILTY

FROM:  DEPARTMENT OF JUSTICE ANTITRUST DIVISION

ALABAMA REAL ESTATE INVESTOR AGREES TO PLEAD GUILTY TO 

CONSPIRACIES TO RIG BIDS AND COMMIT MAIL FRAUD FOR THE PURCHASE

OF REAL ESTATE AT PUBLIC FORECLOSURE AUCTIONS

Agrees to Serve One Year in Prison

WASHINGTON — An Alabama real estate investor has agreed to plead guilty and to serve one year in prison for his role in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in southern Alabama, the Department of Justice announced today. To date, as a result of the ongoing investigation, four individuals and one company have pleaded guilty.


Charges were filed yesterday in the U.S. District Court for the Southern District of Alabama in Mobile, Ala. , against Steven J. Cox of Mobile. Cox was charged with one count of bid rigging and one count of conspiracy to commit mail fraud. According to the plea agreement, which is subject to court approval, Cox has agreed to serve one year in prison, to pay a $10,000 criminal fine and to cooperate with the department’s ongoing investigation.
According to court documents, Cox conspired with others not to bid against one another at public real estate foreclosure auctions in southern Alabama. After a designated bidder bought a property at the public auctions, which typically take place at the county courthouse, the conspirators would generally hold a secret, second auction, at which each participant would bid the amount above the public auction price he or she was willing to pay. The highest bidder at the secret, second auction won the property.


Cox was also charged with conspiring to use the U.S. mail to carry out a scheme to acquire title to rigged foreclosure properties sold at public auctions at artificially suppressed prices, to make and receive payoffs to co-conspirators and to cause financial institutions, homeowners and others with a legal interest in rigged foreclosure properties to receive less than the competitive price for the properties. Cox participated in the bid-rigging and mail fraud conspiracies from as early as January 2004 until at least May 2010.


“The Antitrust Division continues to work with its law enforcement partners to ensure that real estate foreclosure auctions are fair and competitive,” said Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division Sharis A. Pozen. “The division will vigorously pursue those who engage in collusive schemes to eliminate competition in the marketplace.”
FBI Special Agent in Charge of the Mobile FBI Office Lewis M. Chapman recognized the perseverance of agents and prosecutors in this complex investigation. Chapman stated, “This investigation sends the message that real estate fraud including antitrust violations will continue to be pursued in these tough economic times, no matter how intricate the scheme.”
Each violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine for a Sherman Act charge may be increased to twice the gain derived from the crime or twice the loss suffered by the victim if either amount is greater than the statutory maximum fine. Each count of conspiracy to commit mail fraud carries a maximum penalty of 20 years in prison and a fine in an amount equal to the greatest of $250,000, twice the gross gain the conspirators derived from the crime or twice the gross loss caused to the victims of the crime by the conspirators.


The investigation into fraud and bid rigging at certain real estate foreclosure auctions in southern Alabama is being conducted by the Antitrust Division’s Atlanta Field Office and the FBI’s Mobile Office, with the assistance of the U.S. Attorney’s Office for the Southern District of Alabama. Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s Atlanta Field Office at 404-331-7100 or visit www.justice.gov/atr/contact/newcase.htm.


Yesterday’s charges are part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency task force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets and recover proceeds for victims of financial crimes. For more information on the task force, visit www.StopFraud.gov.