Post by unlawflcombatnt on Mar 12, 2014 23:25:34 GMT -6
Real estate investors guilty in bid-rigging scheme
March 11, 2014
• Rigged foreclosure auctions
• “The depressed real estate market in the Central Valley provided opportunities for fraud”
Following a four-week trial, a federal jury has convicted two real estate investors for conspiring to rig bids at public real estate foreclosure auctions held in San Joaquin County. One of the investors was also convicted of obstruction of justice for destroying evidence related to the crimes.
Andrew Katakis and Donald Parker have been found guilty of conspiring to rig bids at real estate foreclosure auctions held in San Joaquin County from at least September 2008 until at least October 2009. Mr. Katakis was also found guilty of obstruction of justice for deleting electronic records related to the conspiracy.
Mr. Katakis was the owner of California Equity Management Group Inc. and managing partner of Lenders Financial Group LLC, both real estate investing companies based in Modesto. Mr. Parker owned and worked for several real estate investing companies based in and around Sacramento and Stockton.
“Today’s convictions send a clear signal that conspirators who illegally seek to line their pockets at the expense of distressed homeowners will be held accountable for their crimes,” says Bill Baer, assistant attorney general in charge of the Department of Justice’s Antitrust Division. “
“The depressed real estate market in the Central Valley provided opportunities for fraud, including bid-rigging at foreclosure auctions,” says Benjamin Wagner, U.S. Attorney in Sacramento.
According to the evidence presented at trial, Messrs. Katakis and Parker and co-conspirators agreed to suppress and restrain competition by rigging bids to obtain selected properties offered at public auctions in San Joaquin County. The government also offered evidence that in September 2010, Mr. Katakis deleted electronic records related to the conspiracy after he received a letter notifying him that a federal grand jury had subpoenaed his bank account.
Evidence showed that 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 actually 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.
The jury could not reach a verdict on a count of mail fraud against the two men and it found Theodore Longley, an auctioneer who worked on behalf of various trustee companies to sell foreclosed houses at public auctions in San Joaquin County, not guilty on both counts.
Messrs. Katakis and Parker each face a possible maximum penalty of 10 years in prison and a $1 million fine. 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 obstruction of justice conviction carries a maximum sentence of 20 years in prison and a $250,000 fine.
In addition to today’s convictions, 11 others have pleaded guilty in connection with the investigation."