Antitrust Law Daily Conviction of real estate investors for bid rigging upheld
Friday, January 17, 2020

Conviction of real estate investors for bid rigging upheld

By Jeffrey May, J.D.

There were no errors to warrant a new trial in case dating back nearly a decade.

The U.S. Court of Appeals in San Francisco has refused to overturn the convictions of two individuals found guilty of conspiring to rig bids at public real estate foreclosure auctions in California’s San Joaquin County. The defendants, Donald Parker and Andrew Katakis, who were real estate investors, appealed their 2014 convictions. They questioned the trial court’s refusal to grant a new trial and the court’s aiding-and-abetting jury instruction. Katakis also raised ineffective assistance of counsel arguments (U.S. v. Katakis, January 16, 2020, per curiam).

In 2009, the federal government began investigating anticompetitive conspiracies between Andrew Katakis and other real estate investors at public real estate foreclosure auctions in San Joaquin County. In 2011, four real estate investors Wiley C. Chandler, Andrew B. Katakis, Donald M. Parker, and Anthony B. Joachim, and auctioneer W. Theodore Longley were indicted. They were charged with conspiring to rig bids and commit mail fraud when purchasing selected properties at public real estate foreclosure auctions. The indictment also charged Longley with aiding and abetting the conspirators. In 2013, a federal grand jury returned a superseding indictment charging Katakis with obstruction of justice. The remaining allegations were unchanged from the original indictment. Chandler and Joachim pleaded guilty, and the remaining defendants went to trial.

A jury in 2014 found Katakis and Parker guilty of conspiring to rig bids. The jury also found Katakis guilty of obstructing justice. There was a hung jury on the mail fraud count as to Katakis and Parker. After the court declared a mistrial as to mail fraud, the government elected not to retry them on that count. The jury acquitted the auctioneer on both the bid rigging and the mail fraud charges. The guilty verdict against Katakis on the obstruction of justice charge was later set aside.

The defendants sought a new trial on the bid rigging charge based on newly discovered evidence obtained after trial, "prejudicial spillover" from evidence supporting an ultimately rejected obstruction of justice count, and ambiguous jury instructions. The district court in 2017 ruled that there was sufficient evidence to establish that the investors knowingly participated in the bid rigging scheme to support the convictions.

Newly discovered evidence. The district court did not abuse its discretion in denying the defendants’ motion for a new trial based on newly discovered evidence, the appellate court decided. Katakis had argued that other investors were conspiring against him and his companies. However, the appellate court explained that the evidence of the defendants’ participation in the conspiracy was not undermined by a side conspiracy.

Jury instructions. The defendants also took issue with a jury instruction on the ground that it did not properly inform the jury what mental state was required to convict Katakis for aiding and abetting a conspiracy. The district court did not plainly err in issuing the specific aiding-and-abetting jury instruction, the appellate court ruled, noting that substantially similar aiding-and-abetting jury instructions had been upheld in the past.

Prejudicial spillover. The appellate court also ruled that the trial court did not abuse its discretion in denying Parker a new trial based on prejudicial spillover related to the obstruction of justice charge. An "obstruction of justice charge based on deleting emails is no more inflammatory than a Sherman Act charge based on bid rigging," the court pointed out. Further, the jury was instructed to consider each count individually and clarified that the obstruction of justice charge applied only to Katakis.

Ineffective-assistance-of-counsel claims. The appellate court rejected an ineffective-assistance-of-counsel claim based on the decision of Katakis’s trial counsel not to call certain witnesses to testify. However, the appellate court refused to consider for the first time on appeal a second ineffective-assistance-of-counsel claim, in which Katakis alleged that he was deprived of his fundamental right to testify because his trial counsel refused to allow him to testify at trial. "Without an adequate record, we must dismiss Katakis’s second ineffective-assistance-of-counsel claim for Katakis to ‘pursue the issue in district court collateral proceedings,’ if he wishes to do so."

The case is No. 17-10487.

Attorneys: Adam D. Chandler, U.S. Department of Justice, for the United States. Page Anthony Pate (Pate & Johnson, LLC) for Andrew B. Katakis.

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