Richard Northcutt, a California real estate executive, pleaded guilty in U.S. District Court in Sacramento, Calif., to a conspiracy to rig bids and commit mail fraud at public real estate foreclosure auctions held in San Joaquin County.
The California Department of Justice said Northcutt and a group of real estate speculators agreed not to bid against each other at certain public real estate foreclosure auctions. Court papers said the purpose of this conspiracy was to restrain competition in order to acquire selected pieces of real estate in this region at noncompetitive prices.
“By rigging public auctions of foreclosed properties, the defendants who have pleaded guilty as a result of this investigation illegally manipulated the market for residential real estate,” said Benjamin Wagner, U.S. attorney for the Eastern District of California. “Improving the transparency and integrity of that market is a principal objective of these prosecutions.”
Besides Northcutt, Anthony Ghio, John Vanzetti and Theodore Hutz pleaded guilty in 2010 in connection with this investigation.
During the public auctions, court documents said after one conspirator bought a property, the remaining conspirators would bid a higher amount at a private auction than the estate originally sold for. The difference between the price at the public auction and the private auction was the group’s illicit profit, which was divided among the conspirators.
Northcutt participated in the scheme from September 2008 to October 2009, according to his plea agreement. The bid rigging conspiracy violates the Sherman Act and carries a maximum penalty of 10 years in prison and a $1 million fine. Northcutt also pleaded guilty to a mail fraud conspiracy, which carries a maximum sentence of 30 years in prison and a $1 million fine.
“With our law enforcement partners, we are vigorously pursuing bid rigging conspiracies in real estate foreclosure auctions that allow individuals to gain illegal profits and take advantage of adverse situations,” said Christine Varney, assistant attorney general of the Department of Justice’s Antitrust Division. “The Antitrust Division has expanded its investigation into anticompetitive practices in real estate foreclosure auctions beyond the Sacramento area into Northern California.”
