Antitrust Law Daily Ten Eastern California real estate investors sentenced for bid rigging, fraud at public foreclosure auctions
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Wednesday, September 14, 2016

Ten Eastern California real estate investors sentenced for bid rigging, fraud at public foreclosure auctions

By Linda O’Brien, J.D., LL.M.

Ten Eastern California real estate investors were sentenced on September 12 for their participation in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Eastern California, the Department of Justice Antitrust Division has announced. The defendants were charged in 2010 and 2011 in the federal district court in Sacramento.

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 Joaquin County public foreclosure auctions at non-competitive prices. When real estate properties were sold at these auctions, the proceeds were 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, the conspirators paid and received money that otherwise would have gone to pay off the mortgage and other holders of debt secured by the properties.

Six of the individuals were from Stockton, California. Anthony B. Ghio was sentenced to serve five months in prison and ordered to pay a $1 million criminal fine and $214,544 in restitution (U.S. v. Ghio, Case No. 10 CR 0144). Ghio pleaded guilty in 2010 to bid rigging. John R. Vanzetti was sentenced to serve five months in prison and ordered to pay a $1 million criminal fine and $271,454 in restitution (U.S. v. Vanzetti, Case No. 2:10-CR-0239). Vanzetti pleaded guilty to big rigging in 2010. Theodore B. Hutz was sentenced to serve five months in prison and ordered to pay a $250,000 criminal fine and $76,670 in restitution (U.S. v. Hutz, Case No. 2:10-CR-0238). Hutz also pleaded guilty in 2010 to bid rigging.

Richard Northcutt was sentenced to serve seven months in prison and ordered to pay a $1 million criminal fine and $614,982 in restitution (U.S. v. Northcutt, Case No. 2:11-CR-0038). Northcutt pleaded guilty in 2011 to conspiring to rig bids and commit mail fraud. Wiley C. Chandler was sentenced to serve seven months in prison and ordered to pay a $500,000 criminal fine and $614,982 in restitution to the victims of the crime and Anthony B. Joachim was sentenced to pay a $175,000 criminal fine and $94,154 in restitution to the victims of the crime (U.S. v. Chandleret al, Case No. 2:11-CR-511 EJG). In December 2011, Chandler was indicted for conspiring to rig bids and commit mail fraud and pleaded guilty to those charges in February 2012. Joachim was charged in 2011 with bid rigging and committing mail fraud and pleaded guilty to those charges in December 2013.

Additionally, Kennen A. Swanger of Alta, California, was sentenced to serve five months in prison and ordered to pay a $5,000 criminal fine (U.S. v. Swanger, Case No. 2:11-CR-0492MCE). Swanger pleaded guilty in 2011 to big rigging and commiting mail fraud. Walter Daniel Olmstead of San Francisco, California, was sentenced to serve eight months in prison and ordered to pay a $29,687 in restitution (U.S. v. Olmstead, Case No. 2:11-CR-00291 KJM). In 2011, Olmstead was charged with bid rigging and conspiracy to commit mail fraud. Gregory L. Jackson of Lodi, California, was sentenced to pay a $150,000 criminal fine and $20,900 in restitution (U.S. v. Jackson, 2:11-cr-00090-LKK) and Robert Rose of Danville, California, was sentenced to pay a $100,000 criminal fine and $24,128 in restitution (U.S. v. Rose, Criminal No. 11-292 WBS). Both Jackson and Rose were charged in 2011 with conspiring to rig bids and commit mail fraud.

Two other real estate investors—Andrew B. Katakis and Donald M. Parker—were convicted at trial of bid rigging in March 2014. To date, a total of thirteen individuals pleaded guilty or were convicted in the U.S. District Court for the Eastern District of California in connection with this investigation.

"These defendants rigged foreclosure auctions to profit at the expense of mortgage holders and homeowners," said Renata Hesse, Acting Assistant Attorney General in charge of the department’s Antitrust Division. "Yesterday’s sentences send a strong message that conspiracies to eliminate competition in any area of our economy will not be tolerated."

Other foreclosure auction investigations. Meanwhile, a status hearing will be held next week in actions against dozens of other real estate investors who were charged with similar charges involving foreclosures auctions in California’s Alameda and Contra Costa counties. The government’s investigation into bid rigging and fraud in California is ongoing and extends to other northern California counties, including San Francisco and San Mateo counties. More than 100 defendants in total have been indicted or have pleaded guilty for rigging foreclosure auctions in Alabama, California, Georgia, and North Carolina, the Justice Department has reported.

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