Tag Archives: Sherman Act

Stanley Electric Co. Ltd. Agrees to Plead Guilty to Price Fixing on Automobile Parts Installed in U.s. Cars; Company Agrees to Pay $1.44 Million Criminal Fine

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Stanley Electric Co. Ltd., a Tokyo-based company, has agreed to plead guilty and to pay a $1.44 million criminal fine for its participation in a conspiracy to fix prices of lamp ballasts installed in cars sold in the United States and elsewhere, the Department of Justice announced today.

According to a one-count felony charge filed today in U.S. District Court for the Eastern District of Michigan in Detroit, Stanley Electric engaged in a conspiracy to rig bids for, and to fix, stabilize and maintain the prices of, automotive high-intensity discharge (HID) lamp ballasts sold to automakers in the United States and elsewhere.  Stanley Electric has also agreed to cooperate with the department’s ongoing investigation. The plea agreement is subject to court approval.

The department said that Stanley Electric and its co-conspirators sold or supplied the ballasts at noncompetitive prices to automakers in the United States and elsewhere.  Stanley Electric’s involvement in the conspiracy to fix prices of automotive HID lamp ballasts lasted from as early as July 1998 until at least February 2010.

Stanley Electric manufactures and sells automotive HID headlamps, which contain automotive HID lamp ballasts.  An automotive HID lamp ballast is an electrical device that is essential for the operation of an HID headlamp.  It regulates the electrical current used to ignite and control the electrical arc that generates the intensely bright light emitted by an automotive HID headlamp fixture.

The department said the company and its co-conspirators carried out the conspiracy through meetings and conversations in which they discussed and agreed upon bids, price quotations and price adjustments and agreed to allocate among the companies certain sales of HID lamp ballasts sold to automobile and component manufacturers.

Including Stanley, 23 corporations have been charged in the department’s investigation into price fixing and bid rigging in the auto parts industry.  Those companies have agreed to pay a total of over $1.8 billion in fines.  Additionally, 26 individuals have been charged.

Stanley Electric Co. Ltd. is charged with price fixing in violation of the Sherman Act, which carries a maximum penalty of a $100 million criminal fine for corporations.  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.

Today’s prosecution arose from an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry, which is being conducted by each of the Antitrust Division’s criminal enforcement sections and the FBI.  Today’s charges were brought by the National Criminal Enforcement Section, with the assistance of the Detroit, Michigan Field Office of the FBI and the FBI headquarters’ International Corruption Unit.  Anyone with information concerning the focus of this investigation should contact the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258, visit  www.justice.gov/atr/contact/newcase.html, or call the Detroit Field Office of the FBI at 313-965-2323.

Toyo Tire & Rubber Co. Ltd. Agrees to Plead Guilty to Price Fixing on Automobile Parts Installed in U.S. Cars;

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Osaka, Japan-based Toyo Tire & Rubber Co. Ltd. has agreed to plead guilty and to pay a $120 million criminal fine for its role in two separate conspiracies to fix the prices of automotive components involving anti-vibration rubber and driveshaft parts installed in cars sold in the United States and elsewhere, the Department of Justice announced today.

According to a two-count felony charge filed today in U.S. District Court for the Northern District of Ohio in Toledo, Toyo engaged in a conspiracy to allocate sales of, to rig bids for, and to fix the prices of automotive anti-vibration rubber parts it sold to Toyota Motor Corp., Nissan Motor Corp., Fuji Heavy Industries Ltd. – more commonly known by its brand name, Subaru – and certain of their subsidiaries, affiliates and suppliers, in the United States and elsewhere.  According to the charge, Toyo and its co-conspirators carried out the anti-vibration rubber parts conspiracy from as early as March 1996 until at least May 2012.

In addition, according to the charge, Toyo engaged in a separate conspiracy to allocate sales of, and to fix, raise and maintain the prices of automotive constant-velocity-joint boots it sold to U.S. subsidiaries of GKN plc, a British automotive parts supplier . According to the charge, Toyo and its co-conspirators carried out the constant-velocity-joint boots conspiracy from as early as January 2006 until as late as September 2010.

Toyo, which has subsidiaries based in Franklin, Ky., and White, Ga., has agreed to cooperate with the department’s ongoing investigation.  The plea agreement is subject to court approval.

“Today’s charge is the latest step in the Antitrust Division’s effort to hold automobile part suppliers accountable for their illegal and collusive conduct,” said Renata B. Hesse, Deputy Assistant Attorney General for the Department of Justice’s Antitrust Division.  “The division continues to vigorously prosecute companies and individuals that seek to maximize their profits through illegal and anticompetitive means.”

Automotive anti-vibration rubber parts are comprised primarily of rubber and metal, and include engine mounts and suspension bushings.  They are installed in automobiles for the purpose of reducing road and engine vibration.  Automotive constant-velocity-joint boots are composed of rubber or plastic, and are used to cover the constant-velocity-joints of an automobile to protect the joints from contaminants.

The department said the company and its co-conspirators carried out the conspiracies through meetings and conversations, discussed and agreed upon bids, price quotations and price adjustments, and agreed to allocate among the companies certain sales of the anti-vibration rubber and  constant-velocity-joint boots  parts sold to automobile and component manufacturers.

Including Toyo, 22 companies and 26 executives have been charged in the Justice Department’s ongoing investigation into the automotive parts industry.  All 22 companies have either pleaded guilty or have agreed to plead guilty and have agreed to pay more than $1.8 billion in criminal fines.  Of the 26 executives, 20 have been sentenced to serve time in U.S. prisons or have entered into plea agreements calling for significant prison sentences.

Toyo is charged with price fixing in violation of the Sherman Act, which carries a maximum penalty of a $100 million criminal fine for corporations.  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.

The charges are the result of an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry, which is being conducted by each of the Antitrust Division’s criminal enforcement sections and the FBI.  Today’s charges were brought by the Antitrust Division’s Chicago Office and the FBI’s Cleveland Field Office, with the assistance of the FBI headquarters’ International Corruption Unit and the U.S. Attorney’s Office for the Northern District of Ohio.  Anyone with information concerning the focus of this investigation should contact the Antitrust Division’s Citizen Complaint Center at 1–888–647–3258, visit  www.justice.gov/atr/contact/newcase.html or call the FBI’s Cleveland Field Office at 216-522-1400.

THREE TAKATA CORP. EXECUTIVES AGREE TO PLEAD GUILTY TO PARTICIPATING IN GLOBAL SEATBELT PRICE FIXING CONSPIRACY

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WASHINGTON — Three high-level executives of Tokyo-based Takata Corp. have  agreed to plead guilty for their participation in a conspiracy to fix prices of  seatbelts installed in cars sold in the United States, the Department of  Justice announced today.  The executives  have also agreed to serve time in a U.S. prison.

According to the one-count felony  charges filed separately against each of the executives today in the U.S.  District Court for the Eastern District of Michigan in Detroit, Yasuhiko Ueno, Saburo  Imamiya and Yoshinobu Fujino participated in a conspiracy to rig bids for, and  to fix, stabilize and maintain the prices of seatbelts sold to Toyota Motor  Corp., Honda Motor Co. Ltd., Nissan Motor Co. Ltd., Fuji Heavy Industries Inc.  – more commonly known by its brand name, Subaru – and Mazda Motor Corp. in the  United States and elsewhere.  The three  executives have agreed to serve prison sentences ranging from 14 to 19 months,  and to cooperate with the department’s ongoing investigation.

Ueno was  employed by Takata’s Auburn Hills, Mich.-based U.S. subsidiary, TK Holdings  Inc., in the United States as senior vice president for sales for Japanese manufacturers  from at least January 2006 through December 2007.  From early 2008 through June 2009, Ueno was  employed by Takata in Japan as deputy division director of the customer  relations division, and as director of the customer relations division from  June 2009 through at least February 2011.  According to the charge, Ueno’s involvement in  the conspiracy lasted from at least as early as January 2006 until at least  February 2011.  Ueno has agreed to serve 19  months in prison and to pay a $20,000 criminal fine.

Imamiya was  employed by Takata in Japan as general manager for Toyota sales from at least  January 2008 to July 2009, and as director of the customer relations division from  July 2009 through at least February 2011.  According to the charge, Imamiya’s involvement  in the conspiracy lasted from at least as early as January 2008 until at least  February 2011.  Imamiya has agreed to  serve 16 months in prison and to pay a $20,000 criminal fine.

Fujino was  employed by Takata in Japan as the manager of the Toyota group within the  customer relations division from at least January 2004 through June 2005, and  as the manager of the Mazda group within the customer relations division from  June 2005 through the end of 2007.  From  the beginning of 2008 through at least February 2011, Fujino was employed by TK  Holdings in the United States as assistant vice president for sales for Japanese  manufacturers.  According to the charge,  Fujino’s involvement in the conspiracy lasted from at least as early as January  2004 until at least February 2011.  Fujino  has agreed to serve 14 months in prison and to pay a $20,000 criminal fine.

Takata  Corp. is a manufacturer of automotive occupant safety systems, including  seatbelts.  Seatbelts are safety strap restraints designed to secure an  occupant in position in a vehicle in the event of an accident, and may be sold  bundled with related parts according to the needs of the automobile  manufacturer.  According to the  charges, the Takata executives and their co-conspirators carried out the  conspiracy by, among other things, agreeing during meetings and communications  to coordinate bids submitted to the automobile manufacturers.

On Sept. 26, 2013, Gary Walker, an  executive of TK Holdings Inc., agreed to plead guilty and serve a sentence of  14 months in prison for his involvement in the same conspiracy.  On Oct. 9, 2013, Takata Corp. agreed to plead  guilty for its involvement in the conspiracy and to pay a criminal fine of  $71.3 million.

Each of the  executives is charged with price fixing in violation of the Sherman Act, which  carries a maximum penalty of 10 years in prison and a $1 million criminal fine for  individuals.  The maximum fine for an  individual 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.

Including today’s charges, 24  individuals have been charged in the department’s investigation into price  fixing and bid rigging in the auto parts industry.  Additionally, 21 corporations have been  charged.

The current prosecution arose from an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry, which is being conducted by each of the Antitrust Division’s criminal enforcement sections and the FBI.  Today’s charges were brought by the National Criminal Enforcement Section, with the assistance of the Detroit, Michigan, Field Office of the FBI.  Anyone with information concerning the focus of this investigation should contact the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258, visit www.justice.gov/atr/contact/newcase.html, or call the Detroit Field Office of the FBI at 313-965-2323.

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THREE TAKATA CORP. EXECUTIVES AGREE TO PLEAD GUILTY TO PARTICIPATING IN GLOBAL SEATBELT PRICE FIXING CONSPIRACY

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All Agree to Serve Prison Time in the United States

WASHINGTON — Three high-level executives of Tokyo-based Takata Corp. have  agreed to plead guilty for their participation in a conspiracy to fix prices of  seatbelts installed in cars sold in the United States, the Department of  Justice announced today.  The executives  have also agreed to serve time in a U.S. prison.

According to the one-count felony  charges filed separately against each of the executives today in the U.S.  District Court for the Eastern District of Michigan in Detroit, Yasuhiko Ueno, Saburo  Imamiya and Yoshinobu Fujino participated in a conspiracy to rig bids for, and  to fix, stabilize and maintain the prices of seatbelts sold to Toyota Motor  Corp., Honda Motor Co. Ltd., Nissan Motor Co. Ltd., Fuji Heavy Industries Inc.  – more commonly known by its brand name, Subaru – and Mazda Motor Corp. in the  United States and elsewhere.  The three  executives have agreed to serve prison sentences ranging from 14 to 19 months,  and to cooperate with the department’s ongoing investigation.

Ueno was  employed by Takata’s Auburn Hills, Mich.-based U.S. subsidiary, TK Holdings  Inc., in the United States as senior vice president for sales for Japanese manufacturers  from at least January 2006 through December 2007.  From early 2008 through June 2009, Ueno was  employed by Takata in Japan as deputy division director of the customer  relations division, and as director of the customer relations division from  June 2009 through at least February 2011.  According to the charge, Ueno’s involvement in  the conspiracy lasted from at least as early as January 2006 until at least  February 2011.  Ueno has agreed to serve 19  months in prison and to pay a $20,000 criminal fine.

Imamiya was  employed by Takata in Japan as general manager for Toyota sales from at least  January 2008 to July 2009, and as director of the customer relations division from  July 2009 through at least February 2011.  According to the charge, Imamiya’s involvement  in the conspiracy lasted from at least as early as January 2008 until at least  February 2011.  Imamiya has agreed to  serve 16 months in prison and to pay a $20,000 criminal fine.

Fujino was  employed by Takata in Japan as the manager of the Toyota group within the  customer relations division from at least January 2004 through June 2005, and  as the manager of the Mazda group within the customer relations division from  June 2005 through the end of 2007.  From  the beginning of 2008 through at least February 2011, Fujino was employed by TK  Holdings in the United States as assistant vice president for sales for Japanese  manufacturers.  According to the charge,  Fujino’s involvement in the conspiracy lasted from at least as early as January  2004 until at least February 2011.  Fujino  has agreed to serve 14 months in prison and to pay a $20,000 criminal fine.

Takata  Corp. is a manufacturer of automotive occupant safety systems, including  seatbelts.  Seatbelts are safety strap restraints designed to secure an  occupant in position in a vehicle in the event of an accident, and may be sold  bundled with related parts according to the needs of the automobile  manufacturer.  According to the  charges, the Takata executives and their co-conspirators carried out the  conspiracy by, among other things, agreeing during meetings and communications  to coordinate bids submitted to the automobile manufacturers.

On Sept. 26, 2013, Antitrust Division’s Citizen Complaint Center at 1-888-647-3258, an  executive of TK Holdings Inc., agreed to plead guilty and serve a sentence of  14 months in prison for his involvement in the same conspiracy.  On Oct. 9, 2013, Takata Corp. agreed to plead  guilty for its involvement in the conspiracy and to pay a criminal fine of  $71.3 million.

Each of the  executives is charged with price fixing in violation of the Sherman Act, which  carries a maximum penalty of 10 years in prison and a $1 million criminal fine for  individuals.  The maximum fine for an  individual 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.

Including today’s charges, 24  individuals have been charged in the department’s investigation into price  fixing and bid rigging in the auto parts industry.  Additionally, 21 corporations have been  charged.

The current prosecution arose from an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry, which is being conducted by each of the Antitrust Division’s criminal enforcement sections and the FBI.  Today’s charges were brought by the National Criminal Enforcement Section, with the assistance of the Detroit, Michigan, Field Office of the FBI.  Anyone with information concerning the focus of this investigation should contact the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258, visit www.justice.gov/atr/contact/newcase.html, or call the Detroit Field Office of the FBI at 313-965-2323.

TWO EXECUTIVES INDICTED FOR ROLES IN FIXING PRICES ON AUTOMOBILE PARTS SOLD TO TOYOTA TO BE INSTALLED IN U.S. CARS

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WASHINGTON — A Cleveland federal  grand jury returned an indictment against two executives of a Japanese  automotive supplier for their roles in an international conspiracy to fix  prices of automotive anti-vibration rubber parts sold to Toyota and installed  in U.S. cars, the Department of Justice announced today.

The indictment,  filed yesterday in U.S. District Court for the Northern District of Ohio in  Toledo, charges Masao Hayashi and Kenya Nonoyama, both Japanese nationals, with  participating in a conspiracy to suppress and eliminate competition in the  automotive parts industry by agreeing to allocate the supply of, to rig bids  for and to fix, raise and maintain the prices of anti-vibration rubber parts  sold to Toyota Motor Corp., Toyota Motor Engineering & Manufacturing North  America Inc. and affiliated companies (collectively Toyota) for installation in  automobiles manufactured and sold in the United States and elsewhere.

Automotive  anti-vibration rubber products are comprised primarily of rubber and metal, and  include engine mounts and suspension bushings.  They are installed in automobiles for the  purpose of reducing road and engine vibration.

The indictment alleges, among other things, that from as early as March  1996 until at least December 2008, Hayashi and Nonoyama and their co-conspirators  conducted meetings and communications in Japan to reach collusive agreements.  The indictment alleges that the conspiracy  involved agreements affecting the Toyota Corolla, Avalon, Tacoma, Camry,  Tundra, Sequoia, Rav4, Sienna, Venza and Highlander.

“Today’s  indictment reaffirms the Antitrust Division’s commitment to hold executives  accountable for actions that corrupt the competitive landscape and harm  consumers,” said Renata B. Hesse, Deputy Assistant Attorney General for the  Department of Justice’s Antitrust Division.  “The Antitrust Division continues to work  closely with its fellow competition enforcers abroad to ensure that there are  no safe harbors for executives who engage in international cartel crimes.”

Hayashi and  Nonoyama are charged with a violation of 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 of the crime, if either of those amounts is greater than the  statutory maximum fine.

Including Hayashi  and Nonoyama, 21 companies and 26 executives have been charged in the Justice  Department’s ongoing investigation into the automotive parts industry.  To date, more than $1.6 billion in criminal  fines have been obtained and seventeen of the charged executives have been  sentenced to serve time in U.S. prisons or have entered into plea agreements  calling for significant prison sentences.

The charges are  the result of an ongoing federal antitrust investigation into price fixing, bid  rigging and other anticompetitive conduct in the automotive parts industry,  which is being conducted by each of the Antitrust Division’s criminal  enforcement sections and the FBI.  Today’s  charges were brought by the Antitrust Division’s Chicago Office and the FBI’s  Cleveland Field Office, with the assistance of the FBI headquarters’  International Corruption Unit and the U.S. Attorney’s Office for the Northern  District of Ohio.  Anyone with  information on price fixing, bid rigging and other anticompetitive conduct  related to other products in the automotive parts industry should contact the  Antitrust Division’s Citizen Complaint Center at (888) 647–3258, visit www.justice.gov/atr/contact/newcase.html or call the FBI’s Cleveland Field Office at (216) 522-1400.

SIX INVESTORS INDICTED FOR THEIR ROLES IN BID RIGGING SCHEME AT MUNICIPAL TAX LIEN AUCTIONS IN NEW JERSEY

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Investigation Has Yielded 20 Charges to Date

WASHINGTON — A federal grand jury in Newark,  N.J., returned an indictment against six investors for their roles in a  conspiracy to rig bids at auctions conducted by New Jersey municipalities for  the sale of tax liens, the Department of Justice announced.

The indictment, filed today in U.S.  District Court for the District of New Jersey in Newark, charges four  individuals, Joseph Wolfson, Gregg Gehring, James Jeffers Jr. and Robert Jeffrey, and two entities, Betty Simon Trustee LLC and Richard Simon Trustee, with participating in a conspiracy to rig bids at tax lien auctions in New  Jersey.  According to the indictment, from at least as early as 1998 and continuing until as late as February 2009,  the investors participated in a conspiracy to rig bids at auctions for the sale of municipal tax liens in New Jersey by agreeing to allocate among certain  bidders which liens each would bid on.  The  indictment alleges that the investors proceeded to submit bids in accordance with the agreements and purchased tax liens at collusive and non-competitive interest rates.

Joseph Wolfson, of Margate, N.J., was  a part-owner of two entities that invested in municipal tax liens, Betty Simon  Trustee and Richard Simon Trustee, both of Northfield, N.J.  Gregg Gehring, of Newton, N.J., was employed  by a major tax lien investment company as a vice president.  James Jeffers Jr., of Burlington, N.J., was a  bidder for Crusader Servicing Corp., which pleaded guilty to its role in the  conspiracy in September 2012, and also a bidder for Crusader’s successor  corporation. Robert Jeffrey, of  Bradenton, Fla., was a bidder for both Crusader and its successor corporation.

“The individuals and entities  charged today demonstrated a blatant disregard for the competitive process by  allocating the purchase of certain municipal tax liens by, from time to time,  flipping a coin, drawing numbers out of a hat or drawing from a deck of cards,”  said Leslie C. Overton, Deputy Assistant Attorney General for the Antitrust  Division.  “The Antitrust Division  remains committed to prosecuting those who thwart the competitive bidding  process.”

The department said that the  primary purpose of the conspiracy was to suppress and restrain competition in  order to obtain selected municipal tax liens offered at public auctions at  non-competitive interest rates.  When the  owner of real property fails to pay taxes on that property, the municipality in  which the property is located may attach a lien for the amount of the unpaid  taxes.  If the taxes remain unpaid after  a waiting period, the lien may be sold at auction.  State law requires that investors bid on the interest  rate delinquent property owners will pay upon redemption.  By law, the bid opens at 18 percent interest  and, through a competitive bidding process, can be driven down to zero percent.   If a lien remains unpaid after a certain  period of time, the investor who purchased the lien may begin foreclosure  proceedings against the property to which the lien is attached.  Since the conspiracy permitted the  conspirators to purchase tax liens with limited competition, each conspirator  was able to obtain liens which earned a higher interest rate.  Property owners were therefore made to pay  higher interest on their tax debts than they would have paid had their liens  been purchased in open and honest competition, the department said.

The indictment alleges, among other  things, that from at least as early as 1998 and continuing until as late as  February 2009, prior to the commencement of certain tax lien auctions in New  Jersey, the investors and their co-conspirators agreed not to compete for the  purchase of certain municipal tax liens.

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 a  Sherman Act violation 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.

Including today’s charges, 20  individuals and entities have been charged as part of an ongoing investigation  into bid rigging or fraud related to municipal tax lien auctions in New Jersey.   To date, 11 individuals – Isadore H.  May, Richard J. Pisciotta Jr., William A. Collins, Robert W. Stein, David M.  Farber, Robert E. Rothman, Stephen E. Hruby, David Butler, Norman T. Remick,  Robert U. Del Vecchio Sr., and Michael Mastellone – and three companies, DSBD  LLC, Crusader Servicing Corp., and Mercer S.M.E. Inc., have pleaded guilty aspart of this investigation.

Today’s charge is 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.

This ongoing investigation is being conducted by the Antitrust  Division’s New York Field Office and the FBI’s Atlantic City, N.J., office.  Anyone with information concerning bid rigging  or fraud related to municipal tax lien auctions should contact the  Antitrust Division’s New York Field Office at 212-335-8000, visit www.justice.gov/atr/contact/newcase.htm  or contact the Atlantic City Resident Agency of the FBI at 609-677-6400.

Antitrust Division Tax Lien Initiative Continues…

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SIX INVESTORS INDICTED FOR THEIR ROLES IN BID RIGGING SCHEME AT
MUNICIPAL TAX LIEN AUCTIONS IN NEW JERSEY

Investigation Has Yielded 20 Charges to Date

WASHINGTON — A federal grand jury in Newark, N.J., returned an indictment against six investors for their roles in a conspiracy to rig bids at auctions conducted by New Jersey municipalities for the sale of tax liens, the Department of Justice announced.

The indictment, filed today in U.S. District Court for the District of New Jersey in Newark, charges four individuals, Joseph Wolfson, Gregg Gehring, James Jeffers Jr. and Robert Jeffrey, and two entities, Betty Simon Trustee LLC and Richard Simon Trustee, with participating in a conspiracy to rig bids at tax lien auctions in New Jersey.  According to the indictment, from at least as early as 1998 and continuing until as late as February 2009, the investors participated in a conspiracy to rig bids at auctions for the sale of municipal tax liens in New Jersey by agreeing to allocate among certain bidders which liens each would bid on.  The indictment alleges that the investors proceeded to submit bids in accordance with the agreements and purchased tax liens at collusive and non-competitive interest rates.

Joseph Wolfson, of Margate, N.J., was a part-owner of two entities that invested in municipal tax liens, Betty Simon Trustee and Richard Simon Trustee, both of Northfield, N.J.  Gregg Gehring, of Newton, N.J., was employed by a major tax lien investment company as a vice president.  James Jeffers Jr., of Burlington, N.J., was a bidder for Crusader Servicing Corp., which pleaded guilty to its role in the conspiracy in September 2012, and also a bidder for Crusader’s successor corporation. Robert Jeffrey, of Bradenton, Fla., was a bidder for both Crusader and its successor corporation.

“The individuals and entities charged today demonstrated a blatant disregard for the competitive process by allocating the purchase of certain municipal tax liens by, from time to time, flipping a coin, drawing numbers out of a hat or drawing from a deck of cards,” said Leslie C. Overton, Deputy Assistant Attorney General for the Antitrust Division.  “The Antitrust Division remains committed to prosecuting those who thwart the competitive bidding process.”

The department said that the primary purpose of the conspiracy was to suppress and restrain competition in order to obtain selected municipal tax liens offered at public auctions at non-competitive interest rates.  When the owner of real property fails to pay taxes on that property, the municipality in which the property is located may attach a lien for the amount of the unpaid taxes.  If the taxes remain unpaid after a waiting period, the lien may be sold at auction.  State law requires that investors bid on the interest rate delinquent property owners will pay upon redemption.  By law, the bid opens at 18 percent interest and, through a competitive bidding process, can be driven down to zero percent.  If a lien remains unpaid after a certain period of time, the investor who purchased the lien may begin foreclosure proceedings against the property to which the lien is attached.  Since the conspiracy permitted the conspirators to purchase tax liens with limited competition, each conspirator was able to obtain liens which earned a higher interest rate.  Property owners were therefore made to pay higher interest on their tax debts than they would have paid had their liens been purchased in open and honest competition, the department said.

The indictment alleges, among other things, that from at least as early as 1998 and continuing until as late as February 2009, prior to the commencement of certain tax lien auctions in New Jersey, the investors and their co-conspirators agreed not to compete for the purchase of certain municipal tax liens.

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 a Sherman Act violation 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.

Including today’s charges, 20 individuals and entities have been charged as part of an ongoing investigation into bid rigging or fraud related to municipal tax lien auctions in New Jersey.  To date, 11 individuals – Isadore H. May, Richard J. Pisciotta Jr., William A. Collins, Robert W. Stein, David M. Farber, Robert E. Rothman, Stephen E. Hruby, David Butler, Norman T. Remick, Robert U. Del Vecchio Sr., and Michael Mastellone – and three companies, DSBD LLC, Crusader Servicing Corp., and Mercer S.M.E. Inc., have pleaded guilty aspart of this investigation.

Today’s charge is 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.

This ongoing investigation is being conducted by the Antitrust Division’s New York Field Office and the FBI’s Atlantic City, N.J., office.  Anyone with information concerning bid rigging or fraud related to municipal tax lien auctions should contact the Antitrust Division’s New York Field Office at 212-335-8000, visit www.justice.gov/atr/contact/newcase.htm or contact the Atlantic City Resident Agency of the FBI at 609-677-6400.

 

Experts See Inconsistencies in DOJ’s Merger Deal with Airlines

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GeyerGorey LLP’s Maurice Stucke provides analysis of Airlines Merger challenge with the Wall Street Journal:

Experts See Inconsistencies in DOJ’s Merger Deal with Airlines

Northern California Real Estate Investor Agrees to Plead Guilty to Bid Rigging at Public Foreclosure Auctions; Investigations Have Yielded 38 Plea Agreements to Date

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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.

Felony charges were filed today in the U.S. District Court for the Northern District of California in Oakland against Chuokee “Joseph” Bo of Pleasanton, Calif.

Bo is the 38th individual 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, Bo conspired with others not to bid against one another, but instead designated a winning bidder to obtain selected properties at public real estate foreclosure auctions in Alameda County, Calif.    Bo was also charged with conspiring to use the mail to carry out a scheme to fraudulently acquire title to selected Alameda County properties sold at public auctions, to make and receive payoffs, and to divert money to co-conspirators that would have otherwise 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.  Bo is charged with participating in the conspiracies beginning as early as August 2009 and continuing until about October 2010.

“Today’s plea agreement is the latest step in the Antitrust Division’s efforts to preserve open competition in local markets,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.  “The division remains committed to prosecuting individuals who subvert the competitive process for their own profit.”

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.

“This is another example of justice being served in preserving the fairness of public real estate foreclosure auctions as well as the FBI’s commitment in investigating those who take advantage of a competitive marketplace,” said David J. Johnson, FBI Special Agent in Charge of the San Francisco Field Office. “Criminal activity like this takes place in our communities and we continue to rely on the public’s help in seeking those who cheat the system.”

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.

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

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WASHINGTON — A Northern California real estate investor pleaded guilty today 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.

Kuo Hsuan “Chuck” Chang, of San Francisco, entered his guilty plea in  U.S. District Court for the Northern District of California in San  Francisco.  Felony charges were filed  against Chang on Oct. 9, 2013.

Chang is the 37th individual 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, Chang 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 County, Calif.  Chang was also  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 co-conspirators’ money that would have otherwise  gone to mortgage holders and others.  Chang is charged with participating in these conspiracies beginning  as early as October 2009 and continuing until about November 2010.

“The Antitrust Division will continue to vigorously prosecute  anticompetitive schemes that compromise local markets and cause financial harm  to consumers,” said Bill Baer, Assistant Attorney General in charge of the  Department of Justice’s Antitrust Division.   “Collusion at foreclosure auctions harmed both lenders and distressed  homeowners in an already struggling real estate market, and the conspirators  must be held accountable.”

As described in the charging document, 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 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.

“We urge anyone with information regarding fraudulent anticompetitive  practices at foreclosure auctions to contact the FBI or our partners at the  Antitrust Division,” said FBI San Francisco Special Agent in Charge David J.  Johnson.  “The FBI will continue to work with our law enforcement partners  and the community to root out and bring to justice those individuals who  undermine the real estate market and victimize legitimate consumers.”

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 charges against  Chang 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, Alameda and Contra Costa 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.

This case was 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