Two Claycord Real Estate Investors Charged with Bid Rigging at Public Foreclosure Auctions

March 18, 2014 23:14 pm · 23 comments

Two Northern California real estate investors pleaded guilty for their roles 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 on June 30, 2011, in the U.S. District Court for the Northern District of California in Oakland, against Grant Alvernaz, of Pleasant Hill, and Douglas Moore, of Walnut Creek.

Alvernaz pleaded guilty to the charges on Sept. 7, 2011. Moore pleaded guilty to the charges on Aug. 24, 2011. The charges and the guilty pleas were unsealed this week. Including Alvernaz and Moore, a total of 46 individuals have pleaded guilty or agreed to plead guilty as a result of the department’s ongoing antitrust investigation into bid rigging and fraud at public real estate foreclosure auctions in Northern California.

According to court documents, Alvernaz and Moore conspired with others not to bid against one another, and instead to designate a winning bidder to obtain selected properties at public real estate foreclosure auctions in Contra Costa and Alameda counties, Calif. Alvernaz and Moore were also charged with conspiring to commit mail fraud by fraudulently acquiring title to selected Contra Costa and Alameda 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. The private auctions often took place at or near the courthouse steps where the public auctions were held. Alvernaz and Moore pleaded guilty to participating in the conspiracies in Contra Costa County beginning as early as February 2009 and continuing until in or about December 2010 and in Alameda County from as early as March 2009 and continuing until about November 2010.

“The integrity of real estate foreclosure markets depends on open and honest competition, which the perpetrators of these collusive schemes undermined,” said Assistant Attorney General Bill Baer in charge of the Department of Justice’s Antitrust Division. “The division will continue to pursue those who illegally enrich themselves at the expense of lenders and financially distressed homeowners.”

The department stated that the primary purpose of the conspiracies was to suppress and restrain competition in order to obtain selected real estate offered at Contra Costa and Alameda 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.

“The unsealed court documents narrate the criminal actions taken as part of this real estate bid-rigging conspiracy in northern California,” said David J. Johnson, FBI Special Agent in Charge of the San Francisco Field Office. “The public should consider this an example of how a competitive marketplace can be taken advantage of by those who are shortsighted by greed.”

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 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, 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, or call the FBI tip line at 415-553-7400.

These cases 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.

Wow March 18, 2014 at 11:40 PM

Alvarez is really cute. Such a shame.

Anon March 19, 2014 at 7:01 AM

Saw these guys on the steps of the Court house all the time — all seemed too friendly. No real surprise to me.

The Mamba March 19, 2014 at 7:27 AM

See ya Richards.

Pro Fi March 19, 2014 at 7:56 AM

I’m so happy to see some justice being served. This type of behavior impacted a lot of individuals that weren’t investing but looking to buy home. It will be interesting to see how stiff a penalty these people end up with.
I am also happy to see they list where these people live/do business.

Silva March 19, 2014 at 8:59 AM

Thank you once again President Obama. Now if we can just see justice served up to these predators.

94519 March 19, 2014 at 10:52 AM

Fry’em and serve’em up hot!
Should get ten years no parole plus restitution.
Send a message to all predators on others

Cartman March 19, 2014 at 11:34 AM

Boil them.

anon March 19, 2014 at 12:38 PM

‘LOVE of money is the root of all evil……and by reaching out for this love some have….stabbed themselves all over with many pains.’
‘God is not one to be mocked, whatever a man is sowing he will reap.’
When will people learn. Sooner or later consequences do catch up to us.

funny man March 19, 2014 at 4:31 PM

about time, this has been going on for decades. story time, a friend of mine (wanna be contractor) went to the public auctions years back looking for houses to flip and were approached by ppl like these. Give them a couple grand and they wont bid against you. but then again they prolly had more cohorts out there that still out bid you.

Hubba March 19, 2014 at 6:16 PM

No person making any comment above has any idea what they are talking about. Most of these poor saps were bullied into doing this or else no homes would have been bought at all and we would be in more of a real estate crisis than we already were. No one made any more money than they would have if they didn’t do this. They didn’t get any money for not bidding, they just said they wouldn’t bid. Stop commenting unless you know the facts. Ignorant people…

Buck Million March 19, 2014 at 8:03 PM

Hubba, here’s a news flash… fraud is fraud!

Pro Fi March 19, 2014 at 8:08 PM

@Hubba…. Bullied? How does that work? Let me guess.. the banks made them do it. And knowing the facts… what you have said hasn’t been reported. If true, that sounds like extortion. Walk away from the game if they aren’t playing by the rules.

Besides, there were lots of folks lining up at the courthouse steps. These A^^holes rigged the system against honest buyers and investors. They were flipping these things like slapjacks at double what they paid for them, so yes money was made.This is greed. plan and simple.

Who's Hubba? March 19, 2014 at 8:57 PM

HAHAHA. “Poor saps”. Do yourself a favor and spend a few minutes on the internet looking in the usual places and you’ll find more info on all these guys. Highly educated, very wealthy and certainly not “poor saps” that were bullied into doing anything.

You don’t understand the game they played if you think that without them and their fraudulent little bidding club the housing crisis would have been worse. Talk to the people who held the notes on the homes that were owed much more than they got at the legal auction, and then these guys rebid among themselves in their little club. I don’t think you even know how they did what they did. Do some research before you spout off. 46 of them and counting.

Fraud is fraud, felon is felon.

Who are you Hubba?

@Silva March 20, 2014 at 9:16 AM

Huh? Obama and Chicago-style politics pretty much wrote the playbook on this kind of stuff- just on a much grander scale. i.e. Solyndra, MF Global, etc.. What a sycophant.

Give me a break March 20, 2014 at 10:28 AM

Bullied? You can’t be serious.

If they felt like they were bullied into committing FRAUD all they had to do was report it to the police or court or whoever and it’d be done with!

These guys weren’t bullied. They were greedy, and got caught.

Flakyjake March 20, 2014 at 4:26 PM

Wait till it all comes out

ANNONeeemoose March 20, 2014 at 4:42 PM

THey’re still practicing real estate… something is very wrong with this State that allows people like this to continue to practice.

Good point March 20, 2014 at 6:14 PM

One of them would even like you to put up $50k to join his investment club. Make 10% return guaranteed. Yeah right, let me just hand you $50k of my hard earned money for you to take care of for me. As Bush #41 would say, “not gonna do it”.

ANNONeeemoose March 20, 2014 at 7:26 PM

Greed is an ugly thing. I know both of these guys. Poor Grant getting hoooked up with Doug. Doug came from the wheeling dealing world of stocks/bonds and is strong in his LDS church. I wouldn’t doubt a lot of those investors are from his church. Our own little Madoff. I’d love to know all those other 40+ co-conspirators are… why no names??

WHy did it take over a year for this to come out? They were agents with prominent Alain Pinel Realtors until VERY recently. Certainly is curious that a company like that would allow them to stay with them with those sorts of GUILTY pleas to such serious felonies! Did they conceal this from their brokerage. Now Grant started his own deal, and Doug is there too… still practicing, their linkedin profiles still indicate they invest people’s money.

Way to protect the public!!!! WOW!

Flakyjake March 20, 2014 at 8:43 PM

So if arrested and plead guilty in 2011 what’s going on ? This is 2014, did they get a slap on the hand ?

Wally March 22, 2014 at 1:28 PM

The whole auction process is rigged against the individual looking to get into a home. The auctioneering entity doesn’t release the properties to be auctioned until the day of the auction and there is no time for one person to see the house, check for a second mortgage, check for a tax lien and then get to the steps with cashier’s checks in time to bid. If you are willing to risk not knowing all the facts, you then face this group of companies who are buying hundreds of homes.
What about the auctioneer himself? He sees a low bidder and then at the end of the day, the house is put in the name of someone else with the permission of the low bidder? This was done hundreds of time. The auctioneer is part of it too.
The whole system needs to be reformed.

ANNONeeemoose March 22, 2014 at 8:03 PM

Wally, that’s not true. We are talking about true foreclosure trustee sales. Those sales are posted well in advance publically. These guys are VERY experienced in doing all their due diligence before they bid. However, these auctions are for cash buyers. These aren’t the auctions you hear advertised on the radio where you can get financing.. these are the homes foreclosed on their owners by the bank. You bid, or it goes back to the bank. Once the bank owns it, they may put it into an entirely different type of auction system.

You are confused as to this type of trustee sale auction on the courthouse steps.

Go back to work.... March 25, 2014 at 12:32 PM

Annoneemoose… you seem to spend a lot of time on here responding..How is it that you know them so well? And if you do, why don’t you tell them how you feel, instead of spending so much time writing about it on here. Why doesn’t everyone stop worrying about what other people are doing since what’s done is done, and get back to work themselves!!!!

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