Florence Fung, Sacramento, California, and Michael Navone, San Rafael, California, two real estate investors, have agreed to plead guilty to their roles in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Northern California.
Fung and Navone are the 39th and 40th individuals to plead guilty or agree to plead guilty as a result of an ongoing antitrust investigation into bid rigging and fraud at public real estate foreclosure auctions in Northern California.
According to court documents, Fung and Navone conspired with others, for various lengths of time between February 2009 and January 2011, 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 Mateo County. Fung and Navone also were 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 money to co-conspirators that would have gone to mortgage holders and others. Navone was also charged with participating in similar conspiracies in San Francisco County beginning as early as October 2009 until about January 2011.
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 Mateo and 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.
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.
The Department of Justice announced the guilty pleas.
“Instead of competing at real estate foreclosure auctions, the conspirators agreed not to bid against one another and determined among themselves who would submit the winning bid, stifling honest and fair competition,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The Antitrust Division and its partners at the FBI continue to remain committed to holding accountable investors who attempt to subvert the competitiveness of the bidding process.”
“The FBI continues to join the Antitrust Division in holding criminals accountable for bid rigging and fraudulent practices at public real estate foreclosure auctions,” said David J. Johnson, FBI Special Agent in Charge of the San Francisco Field Office. “Anti-competitive practices disrupt a fair marketplace, and the FBI will investigate these types of crimes.”