Us real estate brokers plead guilty in auction scam

Six people, including two licensed real estate brokers, have pleaded guilty to conspiring to rig bids at public foreclosure auctions in San Joaquin County, Calif.

Prosecutors said the conspirators would designate one person to bid for them at public auctions in order to keep prices low. After the designated bidder bought a property at a public auction, the group would hold a second, private auction, where each conspirator would bid what they were actually willing to pay. The highest bidder at the private auction won the property. The difference between the rigged bid at the public auction and the high bid at the private auction was divided among the conspirators -- an "illicit profit," prosecutors said.

The scheme ran from about September 2008 until October 2009, with more than $10 million in homes purchased at artificially low prices. The U.S. Department of Justice, the FBI and the San Joaquin County District Attorney's Office are conducting an ongoing investigation of "fraud and bidding irregularities" at auctions in the county, prosecutors said.

Stockton, the county seat, has been a hotbed for foreclosures. Stockton real estate executive Anthony B. Ghio was the first to enter a guilty plea in the case last year. Facing a maximum penalty of 10 years in prison and a $1 million fine, Ghio pleaded guilty to bid rigging in April and agreed to cooperate with investigators in return for a recommendation of a lighter sentence.

Source: Inman News