President Barack Obama’s Financial Fraud Enforcement Task Force Finds Big Real Estate Fraud Scheme

Four real estate investors and an auctioneer were indicted for their participation in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions held in San Joaquin County, California.

The indictment charges real estate investors Wiley C. Chandler, Andrew B. Katakis, Donald M. Parker and Anthony B. Joachim, and auctioneer W. Theodore Longley with conspiring with other unnamed co-conspirators to rig bids and commit mail fraud when purchasing selected properties at public real estate foreclosure auctions.

According to the indictment the conspirators agreed to suppress and restrain competition by rigging bids to obtain selected properties offered at public auctions in San Joaquin County, Calif. The conspirators also devised a scheme to fraudulently acquire titles to selected properties sold at the public auctions and to divert money to co-conspirators that would have gone to the beneficiaries. The indictment alleges that the conspiracy lasted from at least September 2008 until at least October 2009.

“The ongoing investigation demonstrates the Antitrust Division’s resolve to stop conspiracies that suppress competition at real estate foreclosure auctions.” said Acting Assistant Attorney General Pozen. “The division will continue to work with our law enforcement partners to investigate bid-rigging conspiracies in real estate foreclosure auctions in the Sacramento area and northern California.”

“The indictment unsealed today alleges that the defendants engaged in conspiracy, deceit, and heavy-handed tactics to take advantage of a depressed housing market,” said U.S. Attorney Wagner. “This indictment follows a lengthy investigation and a series of guilty pleas by other participants in this activity. But our work is not done. Anticompetitive practices in real estate foreclosure auctions not only harm financial institutions, but drive down home values for other homeowners throughout the region. My office will continue to investigate and prosecute such conduct.”

According to the court documents, after the conspirators’ designated bidder bought a property at a public auction, they would hold a second, private auction, at which each participating conspirator would bid the amount above the public auction price he or she was willing to pay. The conspirator who bid the highest amount at the end of the private auction won the property. The difference between the price at the public auction and that at the second auction was the group’s illicit profit, and it was divided among the conspirators in payoffs.

To date, eight individuals have pleaded guilty in U.S. District Court for the Eastern District of California in connection with the investigation. 

Today’s charges are part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force.  One component of the task force is the national Mortgage Fraud Working Group, co-chaired by U.S. Attorney Wagner. For more information on the task force, visit www.StopFraud.gov.

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Blog post written by the Dowell Taggart Team of RE/MAX Premier Realty 

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