Felony charges were filed in U.S. District Court for the Northern District of California in San Francisco against Robert Williams, an investor who pleaded guilty for his role in conspiracies to rig bids and commit mail fraud at foreclosure auctions.
According to court documents, Williams conspired with others to not bid against one another during a foreclosure auction, but instead to designate a winning bidder to obtain selected properties in San Mateo County.
Additionally, Williams was also charged with conspiring to use the mail to carry out schemes to fraudulently acquire title to selected properties sold at the auctions, to make and receive payoffs, and to divert money to co-conspirators that would have gone to mortgage holders.
The DOJ said Williams’ scam started in October 2009 and lasted a little more than a year. According to the DOJ, the primary purpose of this conspiracy was to suppress competition and conceal payoffs in order to acquire the real estate assets that were up for auction at non-competitive prices. When real estate properties are sold at these types of auctions, the proceeds are used to pay off the mortgage and other debt attached to the property, with the remaining proceeds paid directly to the homeowner.
“Collusion at these foreclosure auctions enabled the conspirators to present the illusion of competition, when they were actually thwarting the competitive process and profiting 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 violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine. Also, a count of conspiracy to commit mail fraud carries a maximum sentencing of 30 years in jail and another $1 million fine.