Another Northern California Real Estate Investor Agrees to Plead Guilty to Bid Rigging at Public Foreclosure Auctions

February 5, 2013 12:37 pm · 12 comments

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.

The following information is from the Department of Justice:

Felony charges were filed today in the U.S. District Court for the Northern District of California in San Francisco against Gilbert Chung of Burlingame, California. Chung is the 27th 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, Chung 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 Francisco and San Mateo Counties, California. Chung 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.

The department said Chung conspired with others to rig bids and commit mail fraud at public real estate foreclosure auctions in San Francisco and San Mateo Counties beginning as early as January 2010 and continuing until about December 2010.

“The conspirators went to great lengths to suppress competition and prices at these foreclosure auctions,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The division will continue to vigorously enforce the antitrust laws and to prosecute those who violate them at the expense of distressed homeowners.”

The department said 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 Francisco and San Mateo 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.

“Today’s charges are another example of our resolve to bring to justice those who engaged in fraudulent bid rigging and anticompetitive practices at foreclosure auctions,” said FBI Special Agent in Charge David J. Johnson of the San Francisco Field Office. “We continue our partnership with the Antitrust Division in aggressively pursuing individuals who participate in these criminal acts.”

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 victim 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, Contra Costa, and Alameda Counties.

In November of 2012, a Concord real estate investor named Norman Montalvo agreed to plead guilty to bid-rigging at public foreclosure auctions. The department said Montalvo conspired with others to rig bids and commit mail fraud at real estate foreclosure auctions in San Francisco and San Mateo counties beginning as early as June 2008 and continuing until about September 2010.

J. February 5, 2013 at 12:48 PM

I always suspected there was bid rigging going on at these auctions (and other auctions). A “Good Old Boy” network if you will.

Karla February 5, 2013 at 1:00 PM

A crime agains humanity in these time deserve harsh sentencing.

Caca February 5, 2013 at 1:14 PM

What to do about all the others who’ve yet to be caught?

Anonymous February 5, 2013 at 1:19 PM

I hope DOJ goes for full restitution of any amounts “earned” or gained by the fools who fixed the bids and invested at bargain-basement prices. Great job FBI and DOJ!

anon February 5, 2013 at 1:34 PM

Ah what we can accomplish without oversight. FREE MARKET!!

jj February 5, 2013 at 1:39 PM

another buddy legault we dont forget

Too Big To Fail February 5, 2013 at 1:41 PM

Notice is hereby given you Shall make campaign contributions.

anon February 5, 2013 at 1:43 PM

There’s no crime here, especially not “against humanity.” It’s just violations of the state, and the sheep here cheer on their overlords and demand that the blasphemers be burned at the stake.

Atticus Thraxx February 5, 2013 at 2:03 PM

Funny. The banks steal and they get a bailout . Homeboy does some collusion and it’s felonies out the ying-yang. Sweet system.

Cy Nical February 5, 2013 at 2:20 PM

Probably a case of two or more guys standing at an auction and saying I won’t bid against you on this one and you don’t bid against me on the next. It’s not right but neither are the special interests and lobbyists that line the politicians pockets and go untouched.
It seems to me this is peanuts in the whole scheme of things but it makes for a good press release.

Anonymouse February 5, 2013 at 2:29 PM

Why is Tom legault allowed to still be in real estate and keep his license ? He pled guilty !!! To crimes relates to real estate! Felonies!

Maybe this is why these idiots keep doing it , because there appear to be no repercussions!

KJ February 5, 2013 at 3:02 PM

You mean the Sherman Antitrust Act is still in existence? Watching how big corporations, and especially big banks, have been allowed to rapaciously take over smaller ones, I thought the Sherman Antitrust Act had been repealed and that trusts and monopolies were now acceptable in America. I’m sorry to see that it’s enforced like most laws — only for use against “little guys.”

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