Four more real estate investors and an auctioneer have been indicted for their roles in an alleged massive California foreclosure auction bid rigging scheme.
Investors Wiley C. Chandler, Andrew B. Katakis, Donald M. Parker and Anthony B. Joachim, and auctioneer W. Theodore Longley are alleged to have conspired to rig bids at San Joaquin County, California foreclosure auctions. Longley is alleged to have aided and abetted the conspirators through his role as auctioneer. In addition to the felony bid rigging charges, the five face felony mail fraud counts as well.
The indicted individuals allegedly agreed not to bid against each other and other conspiracy members at public foreclosure auctions. Instead, a designated bidder among the conspiracy members would place a bid. By prior agreement, these properties were then sold again at a secret auction only open to the conspiracy members, usually at higher prices much closer to the true market value of the properties. The difference in selling price at the secret auction and the public auction was "profits" for the conspiracy and was split among the conspiracy members.
San Joaquin County has been among the hardest hit counties in the country in the foreclosure crisis. Stockton, the largest city in the county, was among the first housing markets to crash in the wake of the housing bubble, and had the highest foreclosure rates in the country in some months of 2007 and 2008. In some months in 2008, foreclosure sales represented over 80% of all home sales in Stockton. Even with homes recently rebounding modestly from their lows in Stockton, the average home has lost 60% of its value in the last five years.
The co-conspirators allegedly rigged bids from September 2008 until at least October 2009-- driving down prices even faster and further than they would have otherwise fallen, and leeching money from beneficiaries and putting it in their own pockets.
“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 Benjamin B. Wagner in announcing the indictments this week. “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.”
Eight other individuals have already pleaded guilty to charges in the conspiracy: Anthony B. Ghio, John R. Vanzetti, Theodore B. Hutz, Richard W. Northcutt, Yama Marifat, Gregory L. Jackson, Walter Daniel Olmstead and Robert Rose. A ninth individual, Kenneth A. Swanger, was charged in the conspiracy in November.
The charges in the case carry maximum sentences of up to 30 years, but such sentences are highly unlikely. Those who have previously pleaded guilty in the case and have agreed to cooperate with prosecutors have typically been recommended for 18 to 24 month prison sentences and have been ordered to pay restitution and fines.