San Francisco Field Office, Antitrust Division

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THURSDAY, NOVEMBER 1, 2012
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NORTHERN CALIFORNIA REAL ESTATE INVESTOR AGREES TO PLEAD
GUILTY TO BID RIGGING AT PUBLIC FORECLOSURE AUCTIONS

Investigation Has Yielded 26 Plea Agreements to Date

WASHINGTON — A Northern California real estate investor has agreed to plead guilty for his role in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Northern California, the Department of Justice announced.

A four-count felony charge was filed today in the U.S. District Court for the Northern District of California, in San Francisco, against Norman Montalvo, of Concord, Calif. Montalvo is the 26th individual to plead guilty or agree to plead guilty as a result of the department’s ongoing antitrust investigation into bid rigging and fraud at public real estate foreclosure auctions in Northern California.

According to court documents, Montalvo conspired with others not to bid against one another, but instead to designate a winning bidder to obtain selected properties at public real estate foreclosure auctions in San Francisco and San Mateo counties, Calif. Montalvo was also charged with a conspiracy to use the mail to carry out a scheme to fraudulently acquire title to selected properties sold at public auctions, to make and receive payoffs, and to divert to co-conspirators money that would have otherwise gone to mortgage holders and others.

The department said Montalvo conspired with others to rig bids and commit mail fraud at public real estate foreclosure auctions in San Francisco and San Mateo counties beginning as early as June 2008 and continuing until about September 2010.

“The real estate investors involved in the conspiracy illegally restrained competition at  foreclosure auctions by falsely creating the appearance of unfettered bidding while they were secretly colluding to suppress prices,” said Scott D. Hammond, Deputy Assistant Attorney General of the Antitrust Division’s criminal enforcement program. “The Antitrust Division remains committed to holding accountable those involved in anticompetitive acts that harm lenders and distressed homeowners.”

The department said that the primary purpose of the conspiracies was to suppress and restrain competition and to conceal payoffs in order to obtain selected real estate offered at San Francisco and San Mateo County public foreclosure auctions at non-competitive prices. When real estate properties are sold at these auctions, the proceeds are used to pay off the mortgage and other debt attached to the property, with remaining proceeds, if any, paid to the homeowner. According to court documents, these conspirators paid and received money that otherwise would have gone to pay off the mortgage and other holders of debt secured by the properties, and, in some cases, the defaulting homeowner.

“Our vigorous pursuit in enforcing fraudulent anticompetitive practices at foreclosure auctions here in northern California is evident in this guilty plea,” said Joel Moss, Acting Special Agent in Charge of the FBI San Francisco Division. “Criminals who take advantage of the real estate auction process will be brought to justice by the FBI and the Department of Justice.”

A violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine for the Sherman Act charges may be increased to twice the gain derived from the crime or twice the loss suffered by the victim if either amount is greater than $1 million. A count of conspiracy to commit mail fraud carries a maximum sentence of 30 years in prison and a $1 million fine. The government can also seek to forfeit the proceeds earned from participating in the conspiracy to commit mail fraud.

The charges today are the latest cases filed by the department in its ongoing investigation into bid rigging and fraud at public real estate foreclosure auctions in San Francisco, San Mateo, Contra Costa and Alameda counties, Calif. These investigations are being conducted by the Antitrust Division’s San Francisco Office and the FBI’s San Francisco office. Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Field Office at 415-436-6660, visit www.justice.gov/atr/contact/newcase.htm or call the FBI tip line at 415-553-7400.

Today’s charges are part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF), which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants, including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
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TAIWAN AUTO LIGHTS MANUFACTURER AND ITS CALIFORNIA DISTRIBUTOR
PLEAD GUILTY IN PRICE-FIXING CONSPIRACY

Companies Sentenced to Pay a Total of $5 Million in Criminal Fines

WASHINGTON — A Taiwan aftermarket auto lights manufacturer and its U.S. distributor pleaded guilty to an indictment charging them with participating in a seven-year, international conspiracy to fix the prices of aftermarket auto lights, and were sentenced today in U.S. District Court for the Northern District of California, the Department of Justice announced.  Aftermarket auto lights are incorporated into an automobile after its original sale, often as repairs following a collision or as accessories and upgrades.

Tainan County, Taiwan-based Eagle Eyes Traffic Industrial Co. Ltd., and its U.S. subsidiary, Chino, Calif.-based E-Lite Automotive Inc., were sentenced by U.S. District Judge Richard Seeborg to pay a total of $5 million in criminal fines.

According to a one-count superseding indictment filed in U.S. District Court for the Northern District of California in San Francisco, on Nov. 30, 2011, Eagle Eyes and E-Lite conspired with others to suppress and eliminate competition by fixing the prices of aftermarket auto lights.  Eagle Eyes participated in the conspiracy from about July 2001 until about September 2008, and E-Lite participated from about March 2006 until about September 2008.

“The conspirators engaged in an international price-fixing scheme that undermined competition in the aftermarket auto lights industry,” said Joseph Wayland, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.  “As a result of the division’s vigorous enforcement efforts, four corporations and five executives have been charged.”

According to court documents, the conspiracy was carried out by the two highest-ranking officers of Eagle Eyes—its chairman, Yu-Chu Lin, and vice chairman, Homy Hong-Ming Hsu— who were both charged along with Eagle Eyes and E-Lite in the superseding indictment.  The executives met with other co-conspirators and agreed to charge prices of aftermarket auto lights according to jointly-determined formulas.  The conspirators issued price announcements to customers in accordance with the jointly-determined price structure, and collected and exchanged information on prices for the purpose of monitoring and enforcing adherence to the conspiracy.  The conspirators also took steps to conceal their actions throughout the duration of the conspiracy.

In addition to today’s pleas, two other corporations have also pleaded guilty.  On Oct. 4, 2011, Sabry Lee pleaded guilty and was sentenced to pay a $200,000 criminal fine.  On Nov. 15, 2011, Maxzone pleaded guilty and was sentenced to pay a $43 million criminal fine.

Chairman Lin, who resides in Taiwan, remains a fugitive.  Vice Chairman Hsu, who was arrested at Los Angeles International Airport over a year ago, pleaded guilty on Sept. 25, 2012.  Hsu is scheduled to be sentenced on Jan. 22, 2013.

In addition to Homy Hsu, three individuals have also pleaded guilty.  Shiu-Min Hsu, the former chairman of Depo Auto Parts Industrial Co. Ltd., a Taiwan manufacturer of aftermarket auto lights, pleaded guilty on March 20, 2012, and is scheduled to be sentenced on Jan. 8, 2013.  Chien Chung Chen, aka Andrew Chen, the former executive vice president of Sabry Lee (U.S.A.) Inc., a U.S. distributor of aftermarket auto lights, pleaded guilty on June 7, 2011. He is scheduled to be sentenced on Jan. 15, 2013.  Polo Shu-Sheng Hsu, the highest-ranking officer of Maxzone Vehicle Lighting Corp., another U.S. distributor of aftermarket auto lights, pleaded guilty on March 29, 2011, served his sentence of 180 days in prison and paid a $25,000 criminal fine.

Eagle Eyes and E-Lite are charged with violating the Sherman Act, which carries a maximum penalty of a $100 million fine.  The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims, if either of those amounts is greater than the statutory maximum fine.

This case is part of an investigation being conducted by the Department of Justice Antitrust Division’s San Francisco Office and the FBI in San Francisco.  Anyone with information concerning illegal or anticompetitive conduct in the aftermarket auto lights industry is urged to call the Antitrust Division’s San Francisco Field Office at 415-436-6660 or visit www.justice.gov/atr/contact/newcase.htm.
 

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TAIWAN AUTO LIGHTS MANUFACTURER EXECUTIVE PLEADS GUILTY IN
PRICE-FIXING CONSPIRACY

WASHINGTON — The vice chairman and second-highest ranking officer of a Taiwan aftermarket auto lights manufacturer pleaded guilty today for his participation in an international conspiracy to fix the prices of aftermarket auto lights, the Department of Justice announced. Aftermarket auto lights are incorporated into an automobile after its original sale, often as repairs following a collision or as accessories and upgrades.

Homy Hong-Ming Hsu was arrested on July 12, 2011, at Los Angeles International Airport and indicted for his participation in the conspiracy. According to a one-count felony superseding indictment filed the in U.S. District Court in San Francisco on Nov. 30, 2011, Hsu conspired with others to suppress and eliminate competition by fixing the prices of aftermarket auto lights. The department said that Hsu, vice chairman of Eagle Eyes Traffic Industrial Co. Ltd., participated in the conspiracy from as early as November 2001 until about September 2008. Eagle Eyes, its U.S. subsidiary E-Lite Automotive Inc., and Eagle Eyes’ highest-ranking officer, Chairman Yu-Chu Lin, aka David Lin, were also indicted for their participation in the conspiracy. Trial for Eagle Eyes and E-Lite is scheduled to begin on Oct. 29, 2012.

According to the indictment, Hsu and co-conspirators participated in a conspiracy in which the participants met and agreed to charge prices of aftermarket auto lights according to jointly determined formulas. The participants in the conspiracy issued price announcements to customers in accordance with the jointly determined price structure, and collected and exchanged information on prices for the purpose of monitoring and enforcing adherence to the conspiracy. The department said that the conspirators held meetings in Taiwan and the United States.

“The Antitrust Division will continue to crack international price fixing cartels that harm American businesses and consumers,” said Joseph Wayland, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.  “Four corporations and five executives have been charged as a result of the Antitrust Division’s investigation into price fixing in the aftermarket auto lights industry.”

Of the five individuals, three have already pleaded guilty. Shiu-Min Hsu, the former chairman of Depo Auto Parts Industrial Co. Ltd, a Taiwan manufacturer of aftermarket auto lights, pleaded guilty on March 20, 2012, and is scheduled to be sentenced on Jan. 8, 2013. Polo Shu-Sheng Hsu, the highest-ranking officer of Maxzone Vehicle Lighting Corp., a U.S. distributor of aftermarket auto lights, pleaded guilty on March 29, 2011, served his sentence of 180 days in prison and paid a $25,000 criminal fine. Chien Chung Chen, aka Andrew Chen, the former executive vice president of Sabry Lee (U.S.A.) Inc., a second U.S. distributor of aftermarket auto lights, pleaded guilty on June 7, 2011. He is scheduled to be sentenced on Jan. 15, 2013.

In addition, of the four corporations, two have pleaded guilty. On Oct. 4, 2011, Sabry Lee pleaded guilty and was sentenced to pay a $200,000 criminal fine. On Nov. 15, 2011, Maxzone pleaded guilty and was sentenced to pay a $43 million criminal fine.

Hsu is charged with violating the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million criminal fine for individuals. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims, if either of those amounts is greater than the statutory maximum fine.

This case is part of an ongoing joint investigation being conducted by the Department of Justice Antitrust Division’s San Francisco Office and the FBI in San Francisco.  Anyone with information concerning illegal or anticompetitive conduct in the aftermarket auto lights industry is urged to call the Antitrust Division’s San Francisco Field Office at 415-436-6660 or visit www.justice.gov/atr/contact/newcase.htm.

FOR IMMEDIATE RELEASE
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NORTHERN CALIFORNIA REAL ESTATE INVESTOR AGREES TO PLEAD
GUILTY TO BID RIGGING AT PUBLIC FORECLOSURE AUCTIONS

Investigation Has Yielded 25 Plea Agreements to Date

WASHINGTON — A Northern California real estate investor has agreed to plead guilty for her role in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Northern California, the Department of Justice announced.Felony charges were filed today in the U.S. District Court for the Northern District of California in Oakland against Danli Liu of Fremont, Calif.

To date, as a result of the department’s ongoing antitrust investigation into bid rigging and fraud at public real estate foreclosure auctions in Northern California, 25 individuals, including Liu, have agreed to plead or have pleaded guilty.

According to court documents, Liu conspired with others not to bid against one another, but instead to designate a winning bidder to obtain selected properties at public real estate foreclosure auctions in Alameda County, Calif.  Liu was also charged with a conspiracy to use the mail to carry out a scheme to fraudulently acquire title to selected properties sold at public auctions, to make and receive payoffs, and to divert money to co-conspirators that would have gone to mortgage holders and others by holding second, private auctions open only to members of the conspiracy.  The department said that the selected properties were then awarded to the conspirators who submitted the highest bids in the second, private auctions.  The private auctions often took place at or near the courthouse steps where the public auctions were held.

The department said Liu conspired with others to rig bids and commit mail fraud at public real estate foreclosure auctions in Alameda County beginning as early as April 2009 and continuing until about March 2010.

“Liu and her fellow conspirators secretly conspired to purchase foreclosed real estate at suppressed prices, thereby restraining competition at these foreclosure auctions in Northern California,” said Scott D. Hammond, Deputy Assistant Attorney General of the Antitrust Division’s criminal enforcement program. “The conspirators’ actions harmed lenders and distressed homeowners in an already struggling real estate market, and the division is committed to holding investors accountable for such behavior.”

The department said that the primary purpose of the conspiracies was to suppress and restrain competition and to conceal payoffs in order to obtain selected real estate offered at Alameda County public foreclosure auctions at non-competitive prices.  When real estate properties are sold at these auctions, the proceeds are used to pay off the mortgage and other debt attached to the property, with remaining proceeds, if any, paid to the homeowner.  According to court documents, these conspirators paid and received money that otherwise would have gone to pay off the mortgage and other holders of debt secured by the properties, and, in some cases, the defaulting homeowner.

“The FBI and the Antitrust Division will continue to bring to justice those who engage in fraudulent anticompetitive practices at foreclosure auctions,” said Stephanie Douglas, FBI Special Agent in Charge of the San Francisco Field Office. “We will hold those individuals accountable for the damage they have done to their victims and the real estate market.”

A violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals.  The maximum fine for the Sherman Act charges may be increased to twice the gain derived from the crime or twice the loss suffered by the victim if either amount is greater than $1 million.  A count of conspiracy to commit mail fraud carries a maximum sentence of 30 years in prison and a $1 million fine.  The government can also seek to forfeit the proceeds earned from participating in the conspiracy to commit mail fraud.

The charges today are the latest cases filed by the department in its ongoing investigation into bid rigging and fraud at public real estate foreclosure auctions in San Francisco, San Mateo, Contra Costa and Alameda counties, Calif.  These investigations are being conducted by the Antitrust Division’s San Francisco Office and the FBI’s San Francisco office.  Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Field Office at 415-436-6660, visit www.justice.gov/atr/contact/newcase.htm or call the FBI tip line at 415-553-7400.

Today’s charges are part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.

 

 

 

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MONDAY, JUNE 18, 2012
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OWNER OF SOUTHERN CALIFORNIA-BASED MESQUITE CHARCOAL
DISTRIBUTOR PLEADS GUILTY TO CUSTOMER ALLOCATION AND BID-
RIGGING CONSPIRACY

WASHINGTON — The owner of a southern California-based mesquite charcoal distributor pleaded guilty for his role in a customer allocation and bid-rigging conspiracy for the sale of mesquite charcoal, the Department of Justice announced today.

According to a one-count felony charge filed on May 7, 2012, in the U.S. District Court in San Francisco, William W. Lord, the owner of Carpinteria, Calif. -based Chef’s Choice Mesquite Charcoal, participated in a conspiracy with competitors to refrain from competing for each other’s customers and to submit noncompetitive bids for the sale of mesquite charcoal. According to the plea agreement, Lord has agreed to cooperate with the department’s ongoing investigation.

“Today’s charge demonstrates the Antitrust Division’s commitment to prosecute bid-rigging conspiracies that involve products used in the everyday lives of consumers and businesses’ daily operations,” said Acting Assistant Attorney General Joseph Wayland in charge of the Department of Justice’s Antitrust Division.

Chef’s Choice distributes and sells mesquite charcoal throughout the United States. Mesquite charcoal, which is typically used by restaurants and individuals to grill meat, fish and poultry, is primarily produced in Mexico and then sold to distributors in the United States for eventual resale to restaurants and consumers.

According to court documents, the charged conspiracy began as early as January 2000 and lasted until about September 2010. Lord and his competitors, a Los Angeles-area mesquite charcoal distributor and a San Francisco-area mesquite charcoal distributor, entered into an agreement to refrain from competing for the sale of mesquite charcoal to each other’s customers. The purpose of this agreement was to ensure that Lord and his competitors would not have to reduce mesquite charcoal prices in the face of competition in order to retain their customers. Lord and his competitors carried out the conspiracy in various ways, including: refraining from submitting bids for the sale of mesquite charcoal to each other’s customers; submitting intentionally noncompetitive bids to each other’s customers; and communicating with each other regarding what price to bid and then submitting agreed-upon, noncompetitive bids to each other’s customers.

Lord is charged with violating the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victim of the crime if either of those amounts is greater than the statutory maximum fine.

Today’s guilty plea arose from an ongoing federal investigation of the mesquite charcoal industry in the United States. The investigation is being conducted by the Department of Justice Antitrust Division’s Chicago Field Office and the FBI’s San Francisco Office. Anyone with information concerning customer allocation, bid rigging or price fixing related to the mesquite charcoal industry in the United States should contact the Antitrust Division’s Chicago Field Office at 312-353-7530 or visit www.justice.gov/atr/contact/newcase.htm.

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TWO NORTHERN CALIFORNIA REAL ESTATE INVESTORS AGREE TO PLEAD
GUILTY TO BID RIGGING AT PUBLIC FORECLOSURE AUCTIONS

Investigation Has Yielded 24 Plea Agreements to Date

WASHINGTON — Two Northern California real estate investors have agreed to plead guilty for their roles in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Northern California, the Department of Justice announced.

Felony charges were filed today in the U.S. District Court for the Northern District of California in Oakland, Calif., against Douglas Ditmer of San Ramon, Calif. and Keith Slipper of Oakland.

To date, as a result of the department’s ongoing antitrust investigation into bid rigging and fraud at public real estate foreclosure auctions in Northern California, 24 individuals, including Ditmer and Slipper, have agreed to plead or have pleaded guilty.

“By agreeing not to compete with one another in the bidding process, these investors illegally profited and undermined the integrity of the real estate market,” said Scott D. Hammond, Deputy Assistant Attorney General of the Antitrust Division’s criminal enforcement program.  “The conspiracy eliminated competition and prevented lenders and distressed homeowners from getting fair market prices for their property.”

According to court documents, Ditmer and Slipper participated in conspiracies to rig bids and commit mail fraud by agreeing to stop bidding or to refrain from bidding for properties at public foreclosure auctions in Contra Costa and Alameda counties, Calif., negotiating payoffs with other conspirators not to compete, purchasing selected properties at public auctions at suppressed prices, and participating in second, private auctions open only to members of the conspiracy, where the property was awarded to the conspirator who submitted the highest bid.

The department said Ditmer conspired with others to rig bids and commit mail fraud at public real estate foreclosure auctions in Contra Costa County beginning as early as July 2008 and continuing until about January 2011, and in Alameda County beginning as early as June 2007 and continuing until about January 2011.  Slipper conspired with others to rig bids and commit mail fraud at public foreclosure auctions in Contra Costa County beginning as early as June 2008 and continuing until about December 2010, and in Alameda County beginning as early as March 2009 and continuing until about May 2009

 “The FBI continues to work closely with the Antitrust Division to target those individuals who engage in fraudulent bid rigging and other anticompetitive activities at foreclosure auctions,” said FBI Special Agent in Charge Stephanie Douglas of the San Francisco Field Office.  “We are committed to bringing to justice those who engage in illegal and unfair practices that adversely impact legitimate home buyers and sellers.”

The department said that the primary purpose of the conspiracies was to suppress and restrain competition in order to obtain selected real estate offered at Contra Costa and Alameda county public foreclosure auctions at non-competitive prices.  When real estate properties are sold at these auctions, the proceeds are used to pay off the mortgage and other debt attached to the property, with remaining proceeds, if any, paid to the homeowner.  According to court documents, these conspirators paid and received money that otherwise would have gone to pay off the mortgage and other holders of debt secured by the properties, and, in some cases, the defaulting homeowner.

Each violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals.  The maximum fine for the Sherman Act charges may be increased to twice the gain derived from the crime or twice the loss suffered by the victim if either amount is greater than $1 million.  Each count of conspiracy to commit mail fraud carries a maximum sentence of 30 years in prison and a $1 million fine.  The government can also seek to forfeit the proceeds earned from participating in the conspiracy to commit mail fraud.

The charges today are the latest cases filed by the department in its ongoing investigation into bid rigging and fraud at public real estate foreclosure auctions in San Francisco, San Mateo, Contra Costa and Alameda counties, Calif.

The ongoing investigation into fraud and bid rigging at certain real estate foreclosure auctions in Northern California is being conducted by the Antitrust Division’s San Francisco Office and the FBI’s San Francisco office.  Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Office at 415-436-6660, visit www.justice.gov/atr/contact/newcase.htm or call the FBI tip line at 415-553-7400.

Today’s charges are part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force.  President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources.  The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets and recover proceeds for victims of financial crimes.  For more information on the task force, visit www.StopFraud.gov.

 

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HITACHI-LG DATA STORAGE INC. EXECUTIVE AGREES TO PLEAD GUILTY
FOR PARTICIPATING IN BID-RIGGING CONSPIRACIES
INVOLVING OPTICAL DISK DRIVES

Korean Executive Agrees to Serve Time in U.S. Prison

WASHINGTON — An executive of Korean-based Hitachi-LG Data Storage Inc. (HLDS) has agreed to plead guilty and to serve time in a U.S. prison for his participation in a series of conspiracies to rig bids for the sale of optical disk drives, the Department of Justice announced today.

According to the four-count felony charge filed today in the U.S. District Court for the Northern District of California in San Francisco, Senior Sales Manager Woo Jin Yang, also known as Eugene Yang, conspired with others to suppress and eliminate competition by rigging bids for optical disk drives sold to Hewlett-Packard Co. (HP). Yang participated in the conspiracies at various times between approximately August 2006 and June 2009. Under the plea agreement, which is subject to court approval, Yang has agreed to serve six months in prison, to pay a $25,000 criminal fine and to cooperate with the department’s ongoing investigation. HLDS is a joint venture between Hitachi Ltd, a Japanese corporation, and LG Electronics Inc., a Republic of Korea corporation.

“Today’s charges demonstrate the Antitrust Division’s commitment to prosecute and deter conduct that harms American businesses and consumers,” said Acting Assistant Attorney General Joseph Wayland in charge of the Department of Justice’s Antitrust Division. “The division will continue to pursue those who participated in these bid-rigging and price-fixing conspiracies so they are held accountable for their actions.”

Optical disk drives are devices such as CD-ROMs, CD-RWs (ReWritable), DVD-ROMs and DVD-RWs (ReWritable) that use laser light or electromagnetic waves to read and/or write data and are often incorporated into personal computers and gaming consoles.

According to the charges, from approximately August 2006 until February 2009, HP hosted optical disk drive procurement events in which participants would be awarded varying amounts of optical disk drive supply depending on where their pricing ranked. According to court documents, Yang and co-conspirators participated in a series of conspiracies involving meetings and discussions to predetermine bidding strategies and prices of optical disk drives, resulting in the submission of collusive and noncompetitive bids for HP’s procurement events. Yang and co-conspirators also exchanged information on sales, market share and the pricing of optical disk drives to monitor and enforce adherence to the agreements.

Including Yang, the department has charged four individuals and one company as a result of its ongoing investigation into the optical disk drive industry. On Nov. 8, 2011, HLDS pleaded guilty in the U.S. District Court for the Northern District of California in San Francisco to 14 counts of violating the federal antitrust laws between approximately June 2004 and September 2009. HLDS also pleaded guilty to one count of participating in a scheme to defraud in connection with an April 2009 procurement event. On the same day, HLDS was sentenced to pay a $21.1 million criminal fine and agreed to assist the department in its ongoing investigation into the optical disk drive industry.

HLDS executives Y.K. Park, S.H. Kim and Sik Hur pleaded guilty to multiple violations of the Sherman Act on March 27, 2012, April 17, 2012 and April 10, 2012 respectively. Park, Kim and Hur are currently awaiting sentencing.

Yang is charged with violating the Sherman Act. Each count carries a maximum fine of $1 million and up to 10 years in prison. 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.

This case is part of an ongoing joint investigation by the Department of Justice Antitrust Division’s San Francisco Office and the FBI in San Francisco and Houston. Anyone with information concerning illegal or anticompetitive conduct in the optical disk drive industry is urged to call the Antitrust Division’s San Francisco Field Office at 415-436-6660 or visit www.justice.gov/atr/contact/newcase.htm.

 
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TWO NORTHERN CALIFORNIA REAL ESTATE INVESTORS AGREE TO PLEAD GUILTY TO BID RIGGING AT PUBLIC FORECLOSURE AUCTIONS

Investigation Has Yielded 22 Plea Agreements to Date

WASHINGTON — Two northern California real estate investors have agreed to plead guilty for their roles in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in northern California, the Department of Justice announced.

The felony charges were filed today in the U.S. District Court for the Northern District of California in San Francisco, against Lydia Fong and Matthew Worthing, both of San Francisco.

According to court documents, Fong and Worthing conspired with others for various lengths of time between October 2009 and November 2010, not to compete against one another, but instead to designate a winning bidder to obtain selected properties at public real estate foreclosure auctions in San Francisco County.  Worthing was also charged with participating in a similar conspiracy in San Mateo County, Calif. from September 2010 until January 2011.  Fong and Worthing also were charged with conspiracies to use the mail to carry out a scheme to fraudulently acquire title to selected properties sold at public auctions.

“The collusion taking place at these auctions eliminated competition from the marketplace and allowed the conspirators to profit from the financial distress of others,” said Acting Assistant Attorney General Sharis A. Pozen in charge of the Department of Justice’s Antitrust Division.  “The division will continue to pursue the perpetrators of these fraudulent schemes so they are held accountable for their actions.”

“Fraudulent bid rigging and other anticompetitive activities at foreclosure auctions by conspirators are illegal and unfair to individuals who are forced to sell and legitimate buyers looking to purchase homes in our communities,” said FBI Special Agent in Charge Stephanie Douglas of the San Francisco Field Office.  “We continue to work closely with our partners at the Antitrust Division to identify and bring to justice those who engage in this type of activity.”

The department said that the primary purpose of the conspiracies was to suppress and restrain competition and to make and receive payoffs in order to obtain selected real estate offered at San Mateo and San Francisco Counties public foreclosure auctions at non-competitive prices.  When real estate properties are sold at these auctions, the proceeds are used to pay off the mortgage and other debt attached to the property, with remaining proceeds, if any, paid to the homeowner.

Each violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals.  The maximum fine for the Sherman Act charges may be increased to twice the gain derived from the crime or twice the loss suffered by the victim if either amount is greater than the $1 million statutory maximum. Each count of conspiracy to commit mail fraud carries a maximum sentence of 30 years in prison and a $1 million fine.  The government can also seek to forfeit the proceeds earned from participating in the conspiracy to commit mail fraud.

The charges today are the latest cases filed by the department in its ongoing investigation into bid rigging and fraud at public real estate foreclosure auctions in San Francisco, San Mateo, Contra Costa and Alameda Counties, Calif.  To date, as a result of the investigation, 22 individuals, including Fong and Worthing, have agreed to plead or have pleaded guilty.

The ongoing investigation into fraud and bid rigging at certain real estate foreclosure auctions in northern California is being conducted by the Antitrust Division’s San Francisco Office and the FBI’s San Francisco office.  Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Office at 415-436-6660, visit www.justice.gov/atr/contact/newcase.htm or call the FBI tip line at 415-553-7400.

Today’s charges are part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force.  President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources.  The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets and recover proceeds for victims of financial crimes.  For more information on the task force, visit www.StopFraud.gov.

 
FOR IMMEDIATE RELEASE
TUESDAY, MARCH 13, 2012
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TAIWAN-BASED AU OPTRONICS CORPORATION, ITS HOUSTON-BASED
SUBSIDIARY AND FORMER TOP EXECUTIVES CONVICTED FOR ROLE IN
LCD PRICE-FIXING CONSPIRACY

Jury Holds Companies Responsible for at Least $500 Million in Illicit Gains

WASHINGTON — Following an eight-week trial, a federal jury in San Francisco today convicted the largest Taiwan liquid crystal display (LCD) producer, its Houston-based subsidiary and their two former top executives for their participation in a five-year conspiracy to fix the prices of thin-film transistor-liquid crystal display (TFT-LCD) panels sold worldwide, the Department of Justice announced. The jury also found that the ill-gotten gain to the conspirators as a result of the fixed sales in the United States was at least $500 million.

AU Optronics Corporation and its American subsidiary, AU Optronics Corporation America, were found guilty today in the U.S. District Court in San Francisco. The trial began on Jan. 9, 2012. AU Optronics Corporation is based in Hsinchu, Taiwan. AU Optronics Corporation America is headquartered in Houston. The companies and individuals were indicted on June 9, 2010. The indictment charged that AU Optronics Corporation participated in the worldwide price-fixing conspiracy from Sept. 14, 2001, to Dec. 1, 2006, and that its subsidiary participated at various times during the conspiracy.

Former AU Optronics Corporation president Hsuan Bin Chen and former AU Optronics Corporation executive vice president Hui Hsiung were also found guilty. The department said that both executives participated in the conspiracy from Oct. 19, 2001, to Dec.1, 2006.

In addition to today’s convictions, seven companies have pleaded guilty to date to charges arising out of the department’s ongoing investigation and have been sentenced to pay criminal fines totaling more than $890 million. In addition to the individuals convicted today, 17 executives have been charged. Ten of the executives have pleaded guilty and have been sentenced to serve a combined total of 2,681 days in prison.

“The jury finding $500 million in ill-gotten gains by members of the cartel demonstrates the harmful effect of this price-fixing conspiracy on American businesses and consumers,” said Acting Assistant Attorney General Sharis A. Pozen in charge of the Department of Justice’s Antitrust Division. “The jury’s decision to hold not only the companies but also their top executives accountable for their anticompetitive actions should send a strong deterrent message to board rooms around the world.”

TFT-LCD panels are used in computer monitors and notebooks, televisions, mobile phones and other electronic devices. By the end of the conspiracy period, the worldwide market for TFT-LCD panels was valued at $70 billion annually. Companies directly affected by the LCD price-fixing conspiracy include some of the largest computer manufacturers in the world, including Apple, Dell and Hewlett Packard.

At trial, the department said that the convicted companies and former executives fixed the prices of LCD panels sold into the United States. The prices were fixed during monthly meetings with their competitors secretly held in hotel conference rooms, karaoke bars and tea rooms around Taiwan. The indictment alleged that the conspiracy lasted for more than five years before it was detected.

Also today, the jury found two AU Optronics Corporation employees not guilty–Lai-Juh Chen, former director of the Desktop Display Business Group, and Tsannrong Lee, former senior manager of the Notebooks Business Group. A mistrial was declared against Hsiu Lung Leung, former AU Optronics Corporation senior manager of Desktop Display Business Group.

The maximum penalty for a Sherman Act violation for an individual is 10 years in prison and a $1 million fine. Since the jury found that the gain derived from the conspiracy was at least $500 million, the maximum fine for the corporations is $1 billion.

Today’s charges are the result of a joint investigation by the Department of Justice Antitrust Division’s San Francisco Field Office and the FBI in San Francisco.

Anyone with information concerning illegal conduct in the TFT-LCD industry is urged to call the Antitrust Division’s San Francisco Field Office at 415-436-6660 or visit www.justice.gov/atr/contact/newcase.htm.

 

 

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FRIDAY, FEBRUARY 24, 2012
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FORMER CHAIRMAN OF TAIWAN AFTERMARKET AUTO LIGHTS
MANUFACTURER AGREES TO PLEAD GUILTY IN PRICE-FIXING CONSPIRACY

WASHINGTON — The former chairman of a Taiwan aftermarket auto lights manufacturer has agreed to plead guilty for his participation in an international conspiracy to fix the prices of aftermarket auto lights, the Department of Justice today announced. Aftermarket auto lights are incorporated into an automobile after its original sale, often as repairs following a collision or as accessories and upgrades.

According to a one-count felony charge filed today in U.S. District Court in San Francisco, Shiu-Min Hsu conspired with others to suppress and eliminate competition by fixing the prices of aftermarket auto lights. The department said that Hsu, former chairman of Depo Auto Parts Industrial Co. Ltd., a Taiwan manufacturer of aftermarket auto lights, participated in the conspiracy from as early as April 2000 until about Sept. 3, 2008. According to the plea agreement, which is subject to court approval, Hsu has agreed to cooperate with the department’s investigation.

“The international price-fixing conspiracy in the aftermarket auto lights industry caused harm to businesses and consumers,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “Including today’s filing, five individuals and four corporations have been charged as a result of the Antitrust Division’s efforts to thwart this type of anticompetitive activity.”

According to the charge, Hsu and co-conspirators participated in a conspiracy in which the participants met and agreed to charge prices of aftermarket auto lights at certain predetermined levels. According to the court document, the participants in the conspiracy issued price announcements and price lists in accordance with the agreements reached, and collected and exchanged information on prices and sales of aftermarket auto lights for the purpose of monitoring and enforcing adherence to the agreed-upon prices. The department said that the conspirators met in Taiwan and the United States for their discussions.

On March 29, 2011, Polo Shu-Sheng Hsu, the former president and CEO of Maxzone Vehicle Lighting Corp., a U.S. distributor of aftermarket auto lights, was sentenced to serve 180 days in prison and to pay a $25,000 criminal fine for his role in the conspiracy. Chien Chung Chen, aka Andrew Chen, the former executive vice president of Sabry Lee (U.S.A.) Inc., another U.S. distributor of aftermarket auto lights, pleaded guilty for his participation in the conspiracy on June 7, 2011. He is currently scheduled to be sentenced on Oct. 16, 2012. In addition, two corporations have pleaded guilty. On Oct. 4, 2011, Sabry Lee pleaded guilty and was sentenced to pay a $200,000 criminal fine. On Nov. 15, 2011, Maxzone pleaded guilty and was sentenced to pay a $43 million criminal fine.

On Nov. 29, 2011, a federal grand jury returned a superseding indictment charging Eagle Eyes Traffic Industrial Co. Ltd. and its U.S. subsidiary E-Lite Automotive Inc., as well as Eagle Eyes’s two highest-ranking officers, chairman Yu-Chu Lin, aka David Lin, and vice chairman Homy Hong-Ming Hsu. Trial is set for June 18, 2012, in U.S. District Court in San Francisco.

This case is part of an investigation being conducted by the Department of Justice Antitrust Division’s San Francisco Field Office and the FBI in San Francisco. Anyone with information concerning illegal or anticompetitive conduct in the aftermarket auto lights industry is urged to call the Antitrust Division’s San Francisco Field Office at 415-436-6660 or visit www.justice.gov/atr/contact/newcase.htm.

 

FOR IMMEDIATE RELEASE
FRIDAY, FEBRUARY 24, 2012
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CONTACT: LAUREN HORWOOD
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CALIFORNIA INVESTOR PLEADS GUILTY TO BID RIGGING AND FRAUD AT
PUBLIC REAL ESTATE FORECLOSURE AUCTIONS

10th Guilty Plea in the Investigation to Date

SACRAMENTO, Calif. — A real estate investor pleaded guilty today in U.S. District Court in Sacramento to conspiring to rig bids and commit mail fraud at public real estate foreclosure auctions held in San Joaquin County, Calif., Sharis A. Pozen, Acting Assistant Attorney General of the Department of Justice’s Antitrust Division, and Benjamin B. Wagner, U.S. Attorney for the Eastern District of California, announced.

Wiley C. Chandler pleaded guilty to conspiring with a group of real estate speculators who agreed to rig bids and commit mail fraud when purchasing selected properties at public real estate foreclosure auctions in San Joaquin County. The goals of the conspiracies were to suppress and restrain competition, to fraudulently obtain selected real estate at noncompetitive prices and to divert money to coconspirators that would have gone to the beneficiaries, the department said in court papers.

According to the court documents, 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 won the property. The difference between the price at the public auction and that at the second auction was the group’s illicit profit. The illicit profit was divided among the conspirators in payoffs. According to Chandler’s plea agreement, the conspiracies began at least early as September 2008 and continued until at least October 2009.

To date, 10 individuals, including Chandler, have pleaded guilty in U.S. District Court for the Eastern District of California in connection with the investigation. They are: Anthony B. Ghio; John R. Vanzetti; Theodore B. Hutz; Richard W. Northcutt; Yama Marifat; Gregory L. Jackson; Walter Daniel Olmstead; Robert Rose; and Kenneth A. Swanger.

Chandler was indicted by a federal grand jury in Sacramento on Dec. 7, 2011 with three investors – Andrew B. Katakis, Donald M. Parker and Anthony B. Joachim – and one auctioneer, W. Theodore Longley. Trial dates for these individuals have yet to be set.

“The Antitrust Division will continue to cooperate with its law enforcement partners to bring to justice those who undermine the competitive market for foreclosed properties and harm consumers,” said Acting Assistant Attorney General Pozen.

“Public auctions are meant for the public, not for an elite group conspiring together for their own profit,” U.S. Attorney Wagner stated. “The prosecution of these defendants is necessary to protect the integrity of the housing market.”

Chandler pleaded guilty to bid rigging, a violation of the Sherman Act, which carries a 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. Chandler also pleaded guilty to conspiracy to commit mail fraud, which carries a maximum sentence of 30 years in prison and a $1 million fine.

These charges arose from an ongoing federal antitrust investigation of fraud and bidding irregularities in certain real estate auctions in San Joaquin County. The investigation is being conducted by the Antitrust Division’s San Francisco Field Office, the U.S. Attorney’s Office for the Eastern District of California, the FBI’s Sacramento Division and the San Joaquin County District Attorney’s Office. Trial attorneys Anna Pletcher and Tai Milder from the Antitrust Division’s San Francisco Field Office and Assistant U.S. Attorney Russell L. Carlberg are prosecuting the case.

Today’s charges are part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. One component of the task force is the national Mortgage Fraud Working Group, co-chaired by U.S. Attorney Wagner. For more information on the task force, visit www.StopFraud.gov.

Anyone with information concerning bid rigging or fraud related to real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Field Office at 415-436-6660, visit www.justice.gov/atr/contact/newcase.htm, contact the U.S. Attorney’s Office for the Eastern District of California at 916-554-2700 or contact the FBI’s Sacramento Division at 916-481-9110.

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THURSDAY, FEBRUARY 9, 2012
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THREE NORTHERN CALIFORNIA REAL ESTATE INVESTORS AGREE TO PLEAD GUILTY TO BID RIGGING AT PUBLIC FORECLOSURE AUCTIONS

Investigation Has Yielded 20 Plea Agreements to Date

WASHINGTON — Three Northern California real estate investors have agreed to plead guilty today for their roles in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Northern California, the Department of Justice announced. To date, as a result of the ongoing investigation, 20 individuals have agreed to plead guilty.

Charges were filed today in U.S. District Court for the Northern District of California in Oakland, Calif., against Barry Heisner of Brentwood, Calif.; Dominic Leung of Alameda, Calif.; and Hilton Wong of San Ramon, Calif.

According to court documents, for various lengths of time between August 2008 and January 2011, Heisner, Leung and Wong conspired with others not to bid against one another at public real estate foreclosure auctions. Instead, the investors designated a winning bidder to obtain selected properties at public real estate foreclosure auctions in Contra Costa County.

“The Antitrust Division will continue to pursue vigorously the perpetrators of these fraudulent schemes. Those who eliminated competition from the marketplace and lined their pockets while preying on the misfortune of others will be held accountable for their actions,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The division also will aggressively seek to forfeit the proceeds earned by those who took a leading role in facilitating these conspiracies.”

“The integrity of the real estate market depends on the transparency and fairness of all participants,” said FBI Special Agent in Charge Stephanie Douglas. “When individuals take advantage of the public’s trust to enrich themselves they damage the very foundation of our economy. The FBI is committed to working with our local and federal partners to continue to bring those who engage in anticompetitive activities to justice.”

Heisner, Leung and Wong also were charged with conspiracies to use the mail to carry out a scheme to fraudulently acquire title to selected properties sold at public auctions, to make and receive payoffs, and to divert money to co-conspirators that would have gone to mortgage holders and others by holding second, private auctions open only to members of the conspiracy. The department said that the selected properties were then awarded to the conspirators who submitted the highest bids in the second, private auctions. The private auctions took place at or near the courthouse steps where the public auctions were held. According to court documents, a forfeiture allegation was also included in the charges against Heisner.

The department said that the primary purpose of the conspiracies was to suppress and restrain competition and to conceal payoffs in order to obtain selected real estate offered at Contra Costa County public foreclosure auctions at noncompetitive prices. When real estate properties are sold at these auctions, the proceeds are used to pay off the mortgage and other debt attached to the property, with remaining proceeds, if any, paid to the homeowner.

Each violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. Each count of conspiracy to commit mail fraud carries a maximum sentence of 30 years in prison and a $1 million fine. The government can also seek to forfeit the proceeds earned from participating in the conspiracy to commit mail fraud. The maximum fine for the Sherman Act charges may be increased to twice the gain derived from the crime or twice the loss suffered by the victim if either amount is greater than the $1 million statutory maximum.

Today’s charges are the latest cases filed by the department in its ongoing investigation into bid rigging and fraud at public real estate foreclosure auctions in San Francisco, San Mateo, Contra Costa and Alameda Counties, Calif.

The investigation into fraud and bid rigging at certain real estate foreclosure auctions in Northern California is being conducted by the Antitrust Division’s San Francisco Field Office and the FBI’s San Francisco office. Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Field Office at 415-436-6660, visit www.justice.gov/atr/contact/newcase.htm or call the FBI tip line at 415-553-7400.

Today’s charges are part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit www.StopFraud.gov.

 

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FOR IMMEDIATE RELEASE
FRIDAY, JANUARY 27, 2012
WWW.JUSTICE.GOV/USAO/CAE

CONTACT: LAUREN HORWOOD
(916) 554-2706
 

CALIFORNIA INVESTOR PLEADS GUILTY TO BID RIGGING AND FRAUD AT
PUBLIC REAL ESTATE FORECLOSURE AUCTIONS

Ninth Guilty Plea in the Investigation to Date

SACRAMENTO, Calif. — A real estate investor pleaded guilty today in U.S. District Court in Sacramento to conspiring to rig bids and commit mail fraud at public real estate foreclosure auctions held in San Joaquin County, Calif., Sharis A. Pozen, Acting Assistant Attorney General of the Department of Justice’s Antitrust Division, and Benjamin B. Wagner, U.S. Attorney for the Eastern District of California, announced.

Kenneth A. Swanger pleaded guilty to conspiring with a group of real estate speculators who agreed not to bid against each other at certain public real estate foreclosure auctions in San Joaquin County. The primary purpose of the conspiracy was to suppress and restrain competition and to obtain selected real estate offered at San Joaquin County public foreclosure auctions at noncompetitive prices, the department said in court papers.

According to the court documents, 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 won the property. The difference between the price at the public auction and that at the second auction was the group’s illicit profit. The illicit profit was divided among the conspirators in payoffs. According to his plea agreement, Swanger participated in the scheme beginning in or about June 2009 until in or about October 2009.

To date, nine individuals, including Swanger, have pleaded guilty in U.S. District Court for the Eastern District of California in connection with the investigation. They are: Anthony B. Ghio; John R. Vanzetti; Theodore B. Hutz; Richard W. Northcutt; Yama Marifat; Gregory L. Jackson; Walter Daniel Olmstead; and Robert Rose. In addition, four other investors, Wiley C. Chandler, Andrew B. Katakis, Donald M. Parker and Anthony B. Joachim, and one auctioneer, W. Theodore Longley, were indicted by a federal grand jury in Sacramento on Dec. 7, 2011.

“This type of illegal scheme undermines the transparency and integrity of the competitive market for residential real estate. Today’s guilty plea sends a clear message that the Department of Justice does not tolerate anticompetitive conduct that harms consumers,” said Acting Assistant Attorney General Pozen. “The Antitrust Division will continue to work with its law enforcement partners to prosecute the perpetrators of anticompetitive schemes in public real estate foreclosure auctions in the Sacramento area and into northern California.”

“The Department of Justice is bringing greater scrutiny to auctions of foreclosed properties as part of our effort to root out fraud in the real estate industry in all its forms,” said U.S. Attorney Wagner. “The days when a few players could rig these auctions for their own benefit are ending.”

Swanger pleaded guilty to bid rigging, a violation of the Sherman Act, which carries a 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. Swanger also pleaded guilty to conspiracy to commit mail fraud, which carries a maximum sentence of 30 years in prison and a $1 million fine.

These charges arose from an ongoing federal antitrust investigation of fraud and bidding irregularities in certain real estate auctions in San Joaquin County. The investigation is being conducted by the Antitrust Division’s San Francisco Office, the U.S. Attorney’s Office for the Eastern District of California, the FBI’s Sacramento Division and the San Joaquin County District Attorney’s Office. Trial attorneys Anna Pletcher and Tai Milder from the Antitrust Division’s San Francisco Office and Assistant U.S. Attorney Russell L. Carlberg are prosecuting the case.

Today’s charges are part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. One component of the task force is the national Mortgage Fraud Working Group, co-chaired by U.S. Attorney Wagner. For more information on the task force, visit www.StopFraud.gov.

Anyone with information concerning bid rigging or fraud related to real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Office at 415-436-6660, visit www.justice.gov/atr/contact/newcase.htm, contact the U.S. Attorney’s Office for the Eastern District of California at 916-554-2700 or contact the FBI’s Sacramento Division at 916-481-9110.

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