Just when you thought it couldn’t get stranger, the continuing saga of a post-Financial Crisis real estate market has taken another turn as some participants have looked for ways to profit off the misery of others. The latest trend, seen in the Bay Area of California is bid-rigging at foreclosure auctions.
The government is pursuing a series of cases and has had a series of indictments over alleged conspiracies to decide in advance who would win the foreclosure auctions.
Wolf Street reported that an Oakland federal jury returned a guilty verdict against real estate investor Glenn Guillory for rigging bids in a public foreclosure auctions held in Contra Costa County. It is the latest case to result in a guilty plea or verdict in prosecutors’ investigation of public foreclosure auction fixing schemes in four Bay Area counties.
According to the report, Guillory was charged in late 2014 for the scheme, with started as early as 2008 and lasted for about three years. In the scheme Guillory and his associates agreed not to compete for real estate at foreclosure auctions in the county. They also offered payoffs for agreeing not to compete and held auctions to set the payments to participants.
The scheme led to lower proceeds from auctions that were to be used to pay off the mortgage and other debts attached to the property. Any remaining funds are paid to the defaulting homeowner. The bid rigging diminished the proceeds for those purposes.
In the rare instance that there were remaining funds, the scheme lowered or eliminated moneys paid to the homeowner in default.
Guillory faces up to 10 years in prison and will be sentenced Aug. 2. He is the 65th person to be convicted through a trial or guilty plea in federal court in Northern California in a U.S. Justice Department probe of bid rigging at public foreclosure auctions at county courthouses in Alameda, Contra Costa, San Mateo and San Francisco counties.
Guillory’s conviction isn’t likely to be the end of this saga. According to the California Department of Justice, the story will continue.
“Indictments are pending against several other real estate investors who participated in the conspiracy.”
The phenomenon isn’t unique to the Bay Area, either.
Recently, 22 defendants were charged in connection with the Justice Department’s ongoing investigation into bid rigging and fraudulent schemes involving real estate foreclosure auctions in the Atlanta area. Twenty of those had either pleaded guilty or agreed to plead guilty.