John Shiells, Real Estate Investor, Danville, California, and Miguel De Sanz, Real Estate Investor, San Francisco, California each pleaded guilty to three counts of bid rigging and three counts of mail fraud in the U.S. District Court of the Northern District of California in Oakland, California. Both were charged in an indictment returned by a federal grand jury in the Northern District of California on Nov. 19, 2014 in connection with their role in bid-rigging conspiracies and mail fraud at public real estate foreclosure auctions in Northern California.
“These defendants took turns paying others or being paid by others to not bid at foreclosure auctions, all so that the conspirators could buy properties at reduced prices,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division. “The defendants and their co-conspirators corrupted these auctions and deprived lenders and homeowners of auction proceeds that were rightfully theirs.”
To date, 56 individuals have pleaded guilty to criminal charges as a result of the Department of Justice’s ongoing antitrust investigations into bid rigging and fraud at public foreclosure auctions in Northern California. In addition, multi-count indictments are pending against 19 real estate investors that have been charged for their roles in bid-rigging and fraud schemes at foreclosure auctions in Alameda, Contra Costa, San Mateo and San Francisco counties.
According to court documents, Shiells and De Sanz agreed not to compete to purchase selected properties at public real estate foreclosure auctions, designated which conspirator would win the selected properties and refrained from bidding on the selected properties at the public auctions. This collusion began in Alameda County as early as June 2007; in Contra Costa County as July 2008; and in San Francisco County as early as November 2008. The deals continued until approximately January 2011.
Both Shiells and De Sanz were also charged with using the mail to carry out the schemes to fraudulently acquire the titles to selected properties sold at public auctions in Alameda, Contra Costa and San Francisco counties, to make and receive payoffs and to divert money to co-conspirators that would have otherwise gone to mortgage holders and other beneficiaries.
“The FBI continues to work closely with the Antitrust Division to target those individuals who engage in fraudulent bid rigging and other anticompetitive activities at foreclosure auctions,” said Special Agent in Charge David J. Johnson of the FBI’s San Francisco Division. “We are committed to bringing to justice those who engage in illegal and unfair practices that adversely impact legitimate home buyers and sellers.”
Each 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 violations of the Sherman Act 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. Each count of mail fraud carries a maximum sentence of 20 years in prison and a $1 million fine.
These charges are part of the department’s ongoing investigation into bid rigging and fraud at public real estate foreclosure auctions in San Francisco, San Mateo, Contra Costa and Alameda counties in California. These investigations are being conducted by the Antitrust Division’s San Francisco Office and the FBI’s San Francisco Division. Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Office at 415-934-5300, or call the FBI tip line at 415-553-7400