Saturday, December 15, 2012

Real Estate Investors Plead Guilty to Bid-Rigging and Mail Fraud

This posting was written by Jody Coultas, Contributor to Antitrust Law Daily.

Robert M. Brannon, son Jason R. Brannon, and their company pleaded guilty to their roles in a conspiracy to rig bids at auctions and commit mail fraud following an indictment returned by the federal district court in Mobile, Alabama, the Department of Justice announced on December 12.

The Brannons and J & R Properties LLC conspired with others not to bid against one another at public real estate foreclosure auctions in southern Alabama. The scheme involved a designated bidder buying property at a public auction, while the conspirators held a secret, second auction, at which each participant would bid the amount above the public auction price he or she was willing to pay. The highest bidder at the secret, second auction won the property.

From October 2004 until at least August 2007, the Brannons and their company also conspired to use the U.S. mail to carry out a fraudulent scheme to acquire title to rigged foreclosure properties sold at public auctions at artificially suppressed prices, to make and receive payoffs to co-conspirators, and to cause financial institutions, homeowners, and others with a legal interest in rigged foreclosure properties to receive less than the competitive price for the properties.

Eight individuals have pleaded guilty in the U.S. District Court for the Southern District of Alabama in connection with this ongoing investigation.

Each violation of the Sherman Act carries a maximum penalty of 10 years in prison and fines of $1 million for individuals and $100 million for companies. 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 amount is greater than the statutory maximum fine. Conspiracy to commit mail fraud charges carry a maximum penalty of 20 years in prison and fines of $250,000 for individuals and $500,000 for companies. The fine may be increased to twice the gross gain the conspirators derived from the crime or twice the gross loss caused to the victims of the crime by the conspirators.

The investigation into fraud and bid rigging at real estate foreclosure auctions was conducted by the Antitrust Division’s Atlanta Field Office and the FBI’s Mobile Office, with the assistance of the U.S. Attorney’s Office for the Southern District of Alabama.

No comments: