Two California Investors Plead Guilty to Bid Rigging

Two real estate investors are pleading guilty to mail fraud and bid rigging at public foreclosure auctions in Northern California, according to the Department of Justice.
[IMAGE] Eric Larsen, a San Leandro resident, and Timothy Powers, an Alamo resident, conspired with others to quash competition for some properties at foreclosure auctions in Alameda and Contra Costa counties.

Larsen, Powers, and others agreed not to bid against each other and designated winning bidders for specific properties prior to the auctions. They also paid others not to bid competitively.

The duo admitted to committing mail fraud by using mail to organize their own private auctions open only to co-conspirators.

The DOJ is charging Powers with participating in auction conspiracies in Contra County from about May 2009 to December 2010, and Larson faces charges for conspiracy in Alameda Country from February 2009 to January 2010.

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Proceeds from foreclosure auctions repay banks for their losses due to the defaulted loans, and when the auction price exceeds the mortgage debt, the homeowner receives the remainder.

While Larson's and Powers' conspiracies diverted money from banks and homeowners, they also led to misleading records of the total purchase price of the properties.

The charges brought against Larsen and Powers are the result of an interagency effort between the FBI and the Antitrust Division to investigate fraud and bid rigging at real estate foreclosure auctions in Northern California.

""The FBI and the Antitrust Division are partners in the fight to bring to justice those who engage in fraudulent anticompetitive practices at foreclosure auctions,"" said FBI special agent in charge Stephanie Douglas. ""We are committed to holding those individuals accountable for the damage they have done to the real estate market and to unsuspecting victims.""

Thus far, 10 individuals have pled guilty to charges brought forth by the FBI and Antitrust Division's investigation.

""The Antitrust Division will vigorously pursue fraudulent schemes that eliminate competition from the marketplace and cause financial harm to victims,"" said Sharis A. Pozen, acting assistant attorney general in charge of the Department of Justice's Antitrust Division.

""The collusion taking place at these auctions preyed on the misfortune caused by the unprecedented rate of foreclosures and lined the pockets of colluding real estate investors with funds that otherwise would have gone to lenders and, at times, homeowners,"" Pozen stated.