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

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 San Francisco, against Florence Fung of  Sacramento, Calif, and Michael Navone of San Rafael, Calif.  Fung and Navone are  the 39th and 40th individuals to plead guilty or agree to  plead guilty as a result of the department’s ongoing antitrust investigations  into bid rigging and fraud at public real estate foreclosure auctions in  Northern California.

According to court documents, Fung and Navone conspired  with others, for various lengths of time between February 2009 and January  2011, 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  Mateo County.  Fung and Navone  also were charged with conspiring to use the mail to carry out schemes 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.  Navone  was also charged with participating in similar conspiracies in San Francisco  County beginning as early as October 2009 until about January 2011.

“Instead of competing at real estate foreclosure auctions, the  conspirators agreed not to bid against one another and determined among themselves  who would submit the winning bid, stifling honest and fair competition,” said Bill  Baer, Assistant Attorney General in charge of the Department of Justice’s  Antitrust Division. “The Antitrust Division and its partners at the FBI  continue to remain committed to holding accountable investors who attempt to  subvert the competitiveness of the bidding process.”

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 Mateo and San Francisco 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 continues to join the Antitrust Division in  holding criminals accountable for bid rigging and fraudulent practices at  public real estate foreclosure auctions,” said David J. Johnson, FBI Special  Agent in Charge of the San Francisco Field Office.  “Anticompetitive practices disrupt a fair  marketplace and the FBI will investigate these types of crimes.”

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 victims 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.

Today’s charges are the latest 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 Office  at 415-436-6660, visit www.justice.gov/atr/contact/newcase.html or call the FBI tip line at  415-553-7400.

Today’s charges were brought in connection with the  President’s Financial Fraud Enforcement Task Force.  The task force was established 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  is 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 nearly 10,000 financial  fraud cases against nearly 15,000 defendants, including more than 2,900  mortgage fraud defendants.  For more  information on the task force, please visit www.StopFraud.gov.