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Tag Archives: Antitrust Division
North Carolina Real Estate Investor Pleads Guilty to Mail Fraud Scheme at Foreclosure Auctions
The most recent Antitrust Division foreclosure auction case filing with the USAO of the Eastern District of North Carolina and the FBI suggests that extensive investigative resources are being expended to combat a variety of fraud schemes that plague foreclosure auctions. Chief among them are “auction pooling” schemes engaged in by “auction rings” of conspirators who refrain from competing against each other inside the public auction who then have a private auction where the property “strike price” is bid higher by the conspirators. The difference in prices between the public and private auctions is a good estimate of “loss” for Title 18 charging purposes or for calculating “commerce” for Title 15 USC Section 1 charging purposes. Note that the Antitrust Division, like almost all government agencies, is struggling with tightened budgets and the fact that a case like this one is being pursued, that involves a significant expenditure of travel expenses, suggests that there is strong institutional focus with deep resources for these kinds of investigations. Although it is never a good idea to engage in mortgage foreclosure auction fraud, it is a particularly bad idea in this enforcement environment.
| FOR IMMEDIATE RELEASE THURSDAY, NOVEMBER 8, 2012 WWW.JUSTICE.GOV |
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NORTH CAROLINA REAL ESTATE INVESTOR PLEADS GUILTY TO MAIL FRAUD SCHEME FOR THE PURCHASE OF REAL ESTATE AT PUBLIC FORECLOSURE AUCTIONS WASHINGTON — A real estate investor pleaded guilty today to conspiring to commit mail fraud at public real estate foreclosure auctions held in Raleigh, N.C., and surrounding areas, the Department of Justice announced. This is the second charge in the department’s ongoing investigation into real estate foreclosure auctions in eastern North Carolina. According to the one-count felony charge filed on Oct. 4, 2012, in the U.S. District Court for the Eastern District of North Carolina, in Greenville, real estate investor, Darren K. Phillips, conspired with a group of real estate speculators to participate in a scheme to defraud financial institutions, homeowners and others with a legal interest in select properties, and to obtain money and property from financial institutions, homeowners and others with a legal interest in rigged properties through false and fraudulent pretenses or representations. According to the plea agreement, Phillips has agreed to cooperate with the department’s ongoing investigation. The primary purpose of the conspiracy was to fraudulently acquire title to rigged foreclosure properties offered through public auctions at artificially suppressed prices, to make and receive payoffs from co-conspirators and to divert money away from financial institutions, homeowners and others with a legal interest in the rigged foreclosure properties, the department said in court papers. The conspiracy resulted in mortgage holders, some of which were financial institutions, receiving a lower price for the foreclosure property. Philips is charged with participating in the conspiracy beginning at least as early as February 2001 and continuing until at least May 2004. “By artificially suppressing auction prices through payoffs and other illegal actions, the conspirators profited at the expense of homeowners and financial institutions,” said Scott D. Hammond, Deputy Assistant Attorney General in charge of the Antitrust Division’s criminal enforcement program. “The division will continue to work with our law enforcement partners to investigate anticompetitive practices in real estate foreclosure auctions in North Carolina and elsewhere.” Phillips is charged with conspiracy to commit mail fraud affecting a financial institution, which carries a maximum sentence of 30 years in prison and a $1 million fine. Phillips is the second person to be charged in this investigation. In September 2010, Christopher Deans, a real estate speculator from Raleigh, pleaded guilty in the U.S. District Court in Greenville in connection with the investigation. Today’s plea arose from an ongoing federal antitrust investigation of fraud and bidding irregularities in certain real estate foreclosure auctions in the Eastern District of North Carolina. The investigation is being conducted by the Antitrust Division’s Atlanta Field Office and the FBI’s Atlanta Field Office, with assistance from the U.S. Attorney’s Office for the Eastern District of North Carolina. Anyone with information concerning bid rigging or fraud related to real estate foreclosure auctions should contact the Antitrust Division’s Atlanta Field Office at 404-331-7100, or visit www.justice.gov/atr/contact/newcase.htm. Today’s plea is 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 Benjamin B. Wagner, U.S. Attorney for the Eastern District of California. For more information on the task force, visit www.StopFraud.gov. |
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Northern California Real Estate Investor Agrees to Plead Guilty to Bid Rigging at Foreclosure Auctions
The most recent Antitrust Division case filing with the FBI suggests that extensive investigative resources are being expended to combat fraud involving foreclosure auctions. Chief among them are “auction pooling” schemes engaged in by “auction rings” of conspirators who refrain from competing against each other inside the public auction who then have a private auction where the property “strike price” is bid higher by the conspirators. The difference in prices between the public and private auctions is a good estimate of “loss” for Title 18 charging purposes or for calculating “commerce” for Title 15 USC Section 1 charging purposes. Although it is never a good idea to engage in mortgage foreclosure auction fraud, it is a particularly bad idea in this enforcement environment.
| FOR IMMEDIATE RELEASE THURSDAY, NOVEMBER 1, 2012 WWW.JUSTICE.GOV |
AT (202) 514-2007 TTY (866) 544-5309 |
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NORTHERN CALIFORNIA REAL ESTATE INVESTOR AGREES TO PLEAD 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
| FOR IMMEDIATE RELEASE TUESDAY, OCTOBER 16, 2012 WWW.JUSTICE.GOV |
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TAIWAN AUTO LIGHTS MANUFACTURER AND ITS CALIFORNIA DISTRIBUTOR 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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Hays Gorey interviewed by Reuters
We’re still putting the finishing touches on our website, but Hays Gorey recently found the time to be interviewed by Reuters.Com. Use the link below for more.
Analysis: Collusion lawsuit in U.S. against buyout firms is no easy case
Taiwan-based liquid crystal display (LCD) producer, was sentenced today in U.S. District Court in San Francisco to pay a $500 million criminal fine for a five-year conspiracy to fix LCD panels sold worldwide
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TAIWAN-BASED AU OPTRONICS CORPORATION SENTENCED TO PAY Company Also Sentenced to Adopt Antitrust Compliance Program; Former Top Executives Each Sentenced to Serve Three Years in Prison and to Pay Criminal Fine WASHINGTON — AU Optronics Corporation, a Taiwan-based liquid crystal display (LCD) producer, was sentenced today in U.S. District Court in San Francisco to pay a $500 million criminal fine for its participation in a five-year conspiracy to fix the prices of thin-film transistor LCD panels sold worldwide, the Department of Justice announced. Its American subsidiary and two former top executives were also sentenced today. The two executives were sentenced to serve prison time and to pay criminal fines for their roles in the conspiracy. The $500 million fine matches the largest fine imposed against a company for violating the U.S. antitrust laws. Today’s sentencing took place before Judge Susan Illston. Along with the criminal fine, AU Optronics Corporation was also sentenced to print advertisements in three major trade publications in the United States and Taiwan acknowledging its convictions and punishments and the remedial steps it has taken as a result of its conviction. The company and its American subsidiary, AU Optronics Corporation America, were also placed on probation for three years, required to adopt an antitrust compliance program and to appoint an independent corporate compliance monitor. “This long-running price-fixing conspiracy resulted in every family, school, business, charity and government agency who bought notebook computers, computer monitors and LCD televisions during the conspiracy to pay more for these products,” said Scott D. Hammond, Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program. “The Antitrust Division will continue to pursue vigorously international cartels that target American consumers and rob them of their hard earned money.” Former AU Optronics Corporation president Hsuan Bin Chen was sentenced to serve three years in prison and to pay a $200,000 criminal fine. Former AU Optronics Corporation executive vice president Hui Hsiung was also sentenced to serve three years in prison and to pay a $200,000 criminal fine. “The number of criminal antitrust cases filed has significantly increased over the last five years, and so has the dedication of FBI resources to these important investigations. The FBI remains committed to thwarting fraud and corruption in the United States and around the world. To that end, we have agents, analysts and professional staff in all of our 56 Field Offices and 63 LEGATs that are committed to fighting these crimes wherever they are found and at whatever level they are found. I would like to commend the employees of the FBI’s San Francisco Field Office and the Department of Justice Antitrust Division, for their fine work on this very important antitrust investigation. This team has devoted countless hours to the investigation and I appreciate their devotion to the mission,” said Assistant Director Ronald T. Hosko, of the FBI’s Criminal Investigative Division. The companies and former executives were found guilty on March 13, 2012, following an eight-week trial. 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 joined the conspiracy as early as spring 2003. The jury found 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. LCD panels are used in computer monitors and notebooks, televisions and other electronic devices. By the end of the conspiracy, the worldwide market for LCD panels was valued at $70 billion annually. The LCD price-fixing conspiracy affected some of the largest computer manufacturers in the world, including Hewlett Packard, Dell and Apple. Including today’s sentences, eight companies have been convicted of charges arising out of the department’s ongoing investigation and have been sentenced to pay criminal fines totaling $1.39 billion. All together, 22 executives have been charged. Including today’s sentences, 12 executives have been convicted and have been sentenced to serve a combined total of 4,871 days in prison. 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 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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